Economics concepts worksheet with answers

Inflation is:

1. AA fall in unemployment
2. BAn increase in the money supply, whatever happens to prices
3. CA rise in the price of one product
4. DA sustained rise in the general price level

The Consumer Price Index (CPI) measures:

1. AThe interest rate charged by banks
2. BThe changing cost of a fixed basket of goods and services bought by households
3. CThe total value of goods produced in a country
4. DThe prices that firms pay for raw materials and other inputs used in their production

If supply increases while demand stays the same, the equilibrium price will usually:

1. ABecome zero
2. BFall
3. CRise
4. DStay exactly the same

Stagflation is a combination of:

1. AHigh inflation and high unemployment with low growth
2. BLow inflation and low unemployment
3. CDeflation and rapid growth
4. DHigh growth and falling prices

In country A, 1 car costs 2 tonnes of wheat to produce; in country B, 1 car costs 4 tonnes of wheat. Which statement is correct?

1. AA has a comparative advantage in both goods
2. BA has a comparative advantage in cars and B in wheat
3. CNeither country gains from trade
4. DB has a comparative advantage in cars and A in wheat

Using the expenditure approach, GDP equals:

1. AC + I + G + (X − M)
2. BC − I + G − (X + M)
3. CWages + profits − taxes
4. DC + I + G + X + M

Purchasing power parity (PPP) suggests that, in the long run, exchange rates adjust so that:

1. AThe same basket of goods costs the same in different countries
2. BInterest rates are equal in all countries
3. CEvery currency ends up having the same nominal value as the US dollar
4. DTrade balances are always zero

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