Economics concepts worksheet with answers

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

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

The Consumer Price Index (CPI) measures:

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

GDP measures:

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

A Gini coefficient of 0 indicates:

1. APerfect inequality of income
2. BZero economic growth
3. CZero unemployment
4. DPerfect equality of income

Unemployment benefits and progressive income taxes are called automatic stabilisers because they:

1. APrevent all recessions from happening
2. BKeep the government budget balanced in every year of the business cycle
3. CReduce fluctuations in demand without new government decisions
4. DFix the exchange rate automatically

A public good is:

1. ARival and excludable
2. BNon-rival and non-excludable
3. CProvided only by private firms
4. DAny good bought by the government

A monopolist faces demand P = 100 − Q and has constant marginal cost of 20. What are its profit-maximising output and price?

1. AQ = 40, P = 20
2. BQ = 80, P = 20
3. CQ = 40, P = 60
4. DQ = 50, P = 50

A liquidity trap is a situation where:

1. AThe central bank raises interest rates sharply to fight high and rapidly rising inflation
2. BBanks have no money left to lend
3. CInflation is very high and rising
4. DInterest rates are near zero and further monetary expansion has little effect on demand