Economics concepts worksheet with answers

A budget deficit occurs when:

1. ATotal government debt falls
2. BThe value of imports exceeds the value of exports in a year
3. CA firm's costs exceed its revenue
4. DGovernment spending exceeds government revenue in a year

The Consumer Price Index (CPI) measures:

1. AThe prices that firms pay for raw materials and other inputs used in their production
2. BThe changing cost of a fixed basket of goods and services bought by households
3. CThe total value of goods produced in a country
4. DThe interest rate charged by banks

Macroeconomics studies:

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

A country imposes a tariff on imported steel. Which effect is most likely?

1. ADomestic steel prices fall and imports rise
2. BDomestic consumers gain surplus
3. CDomestic steel prices rise and domestic production increases
4. DThe world price of steel rises sharply for all countries that trade it

A public good is:

1. AProvided only by private firms
2. BAny good bought by the government
3. CRival and excludable
4. DNon-rival and non-excludable

A country has 950 employed people and 50 unemployed people seeking work. Its unemployment rate is:

1. A5%
2. B5.3%
3. C95%
4. D50%

Price discrimination by a firm requires that:

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

The Coase theorem states that, if property rights are clearly defined and transaction costs are low:

1. AExternalities cannot be corrected without direct government regulation or a Pigouvian tax
2. BPrivate bargaining can reach an efficient outcome regardless of who holds the rights
3. CGovernments must always tax externalities
4. DThe polluter must always compensate the victim