Economics concepts worksheet with answers

A good for which demand rises when income rises is called:

1. AA normal good
2. BA public good
3. CAn inferior good
4. DA Giffen good

The basic economic problem of scarcity means that:

1. ASome goods are always unavailable in shops because firms produce too little
2. BPrices are always rising over time
3. COnly poor countries need to make choices
4. DWants are unlimited but resources to satisfy them are limited

A tariff is:

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

Rising consumer confidence would most likely:

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

Crowding out refers to:

1. AHigher government borrowing raising interest rates and reducing private investment
2. BImports replacing domestic production
3. CToo many firms entering a market
4. DOvercrowded public services

Overfishing in international waters is an example of:

1. AThe tragedy of the commons
2. BA Giffen good
3. CPrice discrimination
4. DA natural monopoly

Which is a key difference between the CPI and the GDP deflator?

1. AThe CPI covers investment goods; the GDP deflator does not
2. BThe GDP deflator includes imported goods; the CPI does not
3. CThey always give exactly the same inflation rate
4. DThe CPI includes prices of imported consumer goods; the GDP deflator covers only domestically produced goods

Akerlof's "market for lemons" explains how:

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