Economics concepts worksheet with answers

Macroeconomics studies:

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

GDP measures:

1. AThe total market value of final goods and services produced in a country in a period
2. BThe value of all exports only
3. CThe government's budget
4. DThe total wealth and savings held by a country's citizens and firms at the end of a year

According to the law of demand, when the price of a normal good rises (other things equal):

1. ADemand shifts to the right
2. BThe quantity demanded rises
3. CThe quantity demanded falls
4. DSupply falls

Using the expenditure approach, GDP equals:

1. AC + I + G + (X − M)
2. BWages + profits − taxes
3. CC − I + G − (X + M)
4. DC + I + G + X + M

Rising consumer confidence would most likely:

1. AHave no effect on the economy
2. BShift aggregate demand to the right
3. CShift aggregate supply to the left
4. DShift aggregate demand to the left

The price of petrol rises sharply. What happens to the demand curve for large cars?

1. AIt shifts to the left
2. BThere is a movement along it
3. CIt shifts to the right
4. DIt becomes vertical

According to the quantity theory of money (MV = PY), if velocity and real output are constant, a 5% rise in the money supply leads to:

1. AAbout a 5% rise in the price level
2. BA 5% fall in velocity
3. CAbout a 5% rise in real output
4. DNo change in prices

Under a fixed exchange rate with free capital movement, a country:

1. ACannot trade with other countries
2. BLoses control of independent monetary policy
3. CMust have a budget surplus
4. DCan set any interest rate it likes