Economics concepts worksheet with answers

Unemployment caused by people moving between jobs is called:

1. AFrictional unemployment
2. BStructural unemployment
3. CCyclical unemployment
4. DSeasonal unemployment

Price elasticity of demand measures:

1. AHow much firms can raise their prices
2. BHow responsive quantity demanded is to a change in price
3. CHow responsive quantity supplied is to changes in consumer income
4. DHow quickly prices change over time

Marginal cost is:

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

A per-unit tax is placed on a good with very inelastic demand and elastic supply. Who bears most of the tax burden?

1. AProducers
2. BConsumers
3. CThe government
4. DIt is always split equally

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

1. A10%
2. B24%
3. C2%
4. D1.5%

A public good is:

1. AAny good bought by the government
2. BRival and excludable
3. CNon-rival and non-excludable
4. DProvided only by private firms

Akerlof's "market for lemons" explains how:

1. ALemons become cheaper in summer
2. BAsymmetric information can drive good-quality products out of a market
3. CPublic goods are under-provided
4. DMonopolies set high prices

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. BNo change in prices
3. CAbout a 5% rise in real output
4. DA 5% fall in velocity