Economics concepts worksheet with answers

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

1. AThe firm must make a loss
2. BAll factors of production can be varied
3. CPrices cannot change
4. DAt least one factor of production is fixed

The basic economic problem of scarcity means that:

1. AOnly poor countries need to make choices
2. BPrices are always rising over time
3. CSome goods are always unavailable in shops because firms produce too little
4. DWants are unlimited but resources to satisfy them are limited

Macroeconomics studies:

1. AThe accounts of a single company
2. BThe decisions of individual households and firms in particular markets
3. COnly the stock market
4. DThe economy as a whole, such as inflation, unemployment and growth

A sharp rise in world oil prices leading to higher inflation is an example of:

1. ACost-push inflation
2. BDeflation
3. CDemand-pull inflation
4. DDisinflation

A price ceiling set below the equilibrium price typically causes:

1. ANo change in the market
2. BAn increase in supply
3. CA shortage
4. DA surplus

A savings account pays a nominal interest rate of 6% and inflation is 4%. The approximate real interest rate is:

1. A10%
2. B2%
3. C1.5%
4. D24%

In the Solow growth model, sustained long-run growth in output per worker comes from:

1. ATechnological progress
2. BPopulation growth
3. CA higher saving rate alone
4. DGovernment budget deficits

A lump-sum tax (a fixed amount, independent of output) is imposed on a profit-maximising monopolist. In the short run, its output will:

1. AStay the same, because MR and MC do not change
2. BFall, because the tax raises the firm's average cost
3. CFall to zero
4. DRise to make up for the tax