Economics concepts worksheet with answers

The unemployment rate is calculated as:

1. AThe number of unemployed divided by the labour force
2. BThe number of unemployed divided by the total population
3. CThe number of employed divided by the labour force
4. DThe number of job vacancies divided by the population

Two goods are substitutes if:

1. AA rise in the price of one increases demand for the other
2. BA rise in income reduces demand for both goods at the same time
3. CThey are always consumed together
4. DThey are produced by the same firm

Real GDP differs from nominal GDP because real GDP:

1. AExcludes government spending
2. BIs adjusted for changes in the price level
3. CIncludes only goods, not services
4. DIs measured in a foreign currency

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. BIt is always split equally
3. CThe government
4. DConsumers

When a central bank buys government bonds from banks in open market operations, it usually:

1. AIncreases bank reserves and the money supply
2. BHas no effect on the money supply
3. CRaises tax revenue for the government
4. DReduces bank reserves and so shrinks the money supply

A minimum wage set above the equilibrium wage in a competitive labour market is predicted to cause:

1. AA surplus of labour (unemployment)
2. BNo change in employment
3. CA fall in the wage rate
4. DA shortage of labour

Under a fixed exchange rate with free capital movement, a country:

1. ALoses control of independent monetary policy
2. BCannot trade with other countries
3. CMust have a budget surplus
4. DCan set any interest rate it likes

The Phillips curve originally suggested:

1. AThat unemployment has no link to inflation
2. BA trade-off between inflation and unemployment in the short run
3. CThat higher taxes always reduce inflation
4. DThat inflation and unemployment always rise and fall together in the short run