Economics concepts worksheet with answers

The current account of the balance of payments mainly records:

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

A budget deficit occurs when:

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

If supply increases while demand stays the same, the equilibrium price will usually:

1. ARise
2. BFall
3. CStay exactly the same
4. DBecome zero

The marginal cost curve cuts the average total cost curve:

1. ANever, as the two curves are parallel
2. BAt the maximum point of average total cost
3. CAt the minimum point of average total cost
4. DWhere average total cost equals zero

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

1. A2%
2. B10%
3. C24%
4. D1.5%

Stagflation is a combination of:

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

In Spence's job market signalling model, education can be valuable to employers even if it does not raise productivity because:

1. AIt reduces the wages employers must pay
2. BIt is less costly for high-ability workers to acquire, so it reveals their type
3. CIt guarantees that every graduate is highly productive
4. DEmployers are required by law to hire graduates

Price discrimination by a firm requires that:

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