Economics concepts worksheet with answers

Free printable Economics concepts worksheet: 8 problems from easy to exam level, with an answer key. Print it or save it as a PDF.

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Name: ____________________   Date: ____________

1.Easy

A common rule of thumb defines a recession as:

  1. AAny month with rising unemployment
  2. BA year with inflation above 5%
  3. CA fall in the stock market of 10%
  4. DTwo consecutive quarters of falling real GDP
2.Easy

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

  1. AA normal good
  2. BAn inferior good
  3. CA public good
  4. DA Giffen good
3.Easy

Which statement is a normative statement?

  1. AThe government should raise the minimum wage
  2. BHigher prices reduce quantity demanded
  3. CUnemployment fell to 4% in June
  4. DThe minimum wage rose by 3% last year
4.Medium

A sharp rise in world oil prices leading to higher inflation is an example of:

  1. ADemand-pull inflation
  2. BCost-push inflation
  3. CDeflation
  4. DDisinflation
5.Medium

Unexpectedly high inflation tends to benefit:

  1. ABorrowers with fixed-rate loans
  2. BSavers holding cash
  3. CLenders who receive fixed interest payments
  4. DPensioners on fixed nominal incomes
6.Medium

A price ceiling set below the equilibrium price typically causes:

  1. AAn increase in supply
  2. BA shortage
  3. CA surplus
  4. DNo change in the market
7.Hard

For a normal good, when its price falls, the substitution effect and income effect:

  1. ACancel out exactly
  2. BBoth decrease the quantity demanded
  3. CBoth increase the quantity demanded
  4. DWork in opposite directions
8.Hard

The Lerner index (P − MC)/P for a profit-maximising monopolist equals 1/|PED|. If |PED| = 4, the price is:

  1. AEqual to marginal cost
  2. B25% above marginal cost, as a share of price
  3. C4 times marginal cost
  4. D75% above marginal cost, as a share of price

Answer key

  1. 1. D · Two consecutive quarters of falling real GDP
  2. 2. A · A normal good
  3. 3. A · The government should raise the minimum wage
  4. 4. B · Cost-push inflation
  5. 5. A · Borrowers with fixed-rate loans
  6. 6. B · A shortage
  7. 7. C · Both increase the quantity demanded
  8. 8. B · 25% above marginal cost, as a share of price

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