Economics concepts worksheet with answers

Which list gives the four traditional factors of production?

1. ALand, labour, capital and entrepreneurship
2. BSupply, demand, price and quantity
3. CMoney, labour, shares and land
4. DWages, rent, interest and profit

The current account of the balance of payments mainly records:

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

Marginal cost is:

1. ATotal cost divided by the total number of units produced
2. BThe lowest price a firm can charge
3. CThe cost of the firm's buildings and machines
4. DThe extra cost of producing one more unit of output

Nominal GDP grew by 5% and the GDP deflator rose by 2%. Real GDP grew by approximately:

1. A7%
2. B10%
3. C3%
4. D2.5%

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

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

In perfect competition in the long run, firms earn:

1. AZero economic profit
2. BLarge economic profits
3. CLosses forever
4. DMonopoly profits

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

A liquidity trap is a situation where:

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