Economics concepts worksheet with answers

A tariff is:

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

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

1. AThe firm must make a loss
2. BAt least one factor of production is fixed
3. CAll factors of production can be varied
4. DPrices cannot change

Which body sets monetary policy for the euro area?

1. AThe European Commission
2. BThe national finance ministries
3. CThe European Parliament
4. DThe European Central Bank

Rising consumer confidence would most likely:

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

A country has 950 employed people and 50 unemployed people seeking work. Its unemployment rate is:

1. A50%
2. B5.3%
3. C95%
4. D5%

Stagflation is a combination of:

1. AHigh growth and falling prices
2. BDeflation and rapid growth
3. CHigh inflation and high unemployment with low growth
4. DLow inflation and low unemployment

In the Mundell–Fleming model with perfect capital mobility and a floating exchange rate:

1. AFiscal policy is effective, but monetary policy is largely ineffective
2. BMonetary policy is effective but fiscal policy is largely ineffective
3. CBoth policies have no effect on output
4. DBoth policies are equally effective

The Marshall–Lerner condition states that a currency depreciation improves the trade balance if:

1. AThe country has a budget surplus
2. BExports and imports have zero price elasticity
3. CInterest rates rise at the same time
4. DThe sum of the price elasticities of demand for exports and imports exceeds 1