Economics concepts worksheet with answers

Two goods are complements if:

1. AOne can easily replace the other
2. BA rise in the price of one reduces demand for the other
3. CThey have the same price
4. DDemand for both rises when the price of either one of them rises

Real GDP differs from nominal GDP because real GDP:

1. AExcludes government spending
2. BIs adjusted for changes in the price level
3. CIs measured in a foreign currency
4. DIncludes only goods, not services

In economics, the short run is a period in which:

1. AAll factors of production can be varied
2. BPrices cannot change
3. CAt least one factor of production is fixed
4. DThe firm must make a loss

Stagflation is a combination of:

1. ALow inflation and low unemployment
2. BDeflation and rapid growth
3. CHigh growth and falling prices
4. DHigh inflation and high unemployment with low growth

In perfect competition in the long run, firms earn:

1. ALarge economic profits
2. BZero economic profit
3. CLosses forever
4. DMonopoly profits

When a central bank buys government bonds from banks in open market operations, it usually:

1. AReduces bank reserves and so shrinks the money supply
2. BRaises tax revenue for the government
3. CIncreases bank reserves and the money supply
4. DHas no effect on the money supply

The Marshall–Lerner condition states that a currency depreciation improves the trade balance if:

1. AExports and imports have zero price elasticity
2. BThe country has a budget surplus
3. CInterest rates rise at the same time
4. DThe sum of the price elasticities of demand for exports and imports exceeds 1

Price discrimination by a firm requires that:

1. AAll consumers have identical elasticity of demand and buy the same amount
2. BIt has market power, can separate markets and prevent resale
3. CIts costs differ for each customer
4. DIt operates in perfect competition