Economics concepts worksheet with answers

Which statement is a normative statement?

1. AThe minimum wage rose by 3% last year
2. BThe government should raise the minimum wage
3. CUnemployment fell to 4% in June
4. DHigher prices reduce quantity demanded

The current account of the balance of payments mainly records:

1. AChanges in the government's debt
2. BPurchases and sales of foreign companies, shares, bonds and other assets
3. CThe central bank's interest rate decisions
4. DTrade in goods and services, primary income and current transfers

A tariff is:

1. AA limit on the quantity of imports
2. BA ban on all foreign trade
3. CA tax on imported goods
4. DA subsidy for exporters

The income elasticity of demand for a good is -0.4. The good is:

1. AA complement
2. BA normal necessity
3. CA luxury good
4. DAn inferior good

Rising consumer confidence would most likely:

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

In country A, 1 car costs 2 tonnes of wheat to produce; in country B, 1 car costs 4 tonnes of wheat. Which statement is correct?

1. AA has a comparative advantage in cars and B in wheat
2. BNeither country gains from trade
3. CB has a comparative advantage in cars and A in wheat
4. DA has a comparative advantage in both goods

The principal–agent problem arises when:

1. ATwo firms agree to fix prices
2. BThe government owns a firm
3. CAn agent acting for a principal has different goals and the principal cannot fully monitor them
4. DA buyer and seller have identical information

Okun's law describes:

1. AA negative relationship between output growth and changes in unemployment
2. BA positive relationship between inflation and nominal interest rates over time
3. CThe relationship between tax rates and revenue
4. DThe link between money supply and prices