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

Fiscal policy uses:

  1. ATrade agreements only
  2. BInterest rates set by the central bank
  3. CGovernment spending and taxation
  4. DExchange rate controls only
2.Easy

Consumer surplus is:

  1. AThe profit that firms make from selling to consumers at prices above their production costs
  2. BThe amount of goods left unsold at the end of the day
  3. CThe total amount consumers spend on a good
  4. DThe difference between what consumers are willing to pay and what they actually pay
3.Easy

Deflation is:

  1. AA fall in the value of the currency
  2. BA reduction in government spending
  3. CA slowdown in the rate of inflation, with prices still rising
  4. DA sustained fall in the general price level
4.Medium

Unexpectedly high inflation tends to benefit:

  1. ABorrowers with fixed-rate loans
  2. BPensioners on fixed nominal incomes
  3. CLenders who receive fixed interest payments
  4. DSavers holding cash
5.Medium

A country imposes a tariff on imported steel. Which effect is most likely?

  1. ADomestic consumers gain surplus
  2. BDomestic steel prices fall and imports rise
  3. CDomestic steel prices rise and domestic production increases
  4. DThe world price of steel rises sharply for all countries that trade it
6.Medium

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

  1. AReduces bank reserves and so shrinks the money supply
  2. BRaises tax revenue for the government
  3. CIncreases bank reserves and the money supply
  4. DHas no effect on the money supply
7.Hard

The "convergence hypothesis" from the Solow model predicts that:

  1. AExchange rates converge to a fixed value
  2. BAll countries will eventually have the same population
  3. CPoorer countries with similar fundamentals tend to grow faster than richer ones
  4. DRich countries always grow faster than poor ones, because they have more capital
8.Hard

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

  1. A25% above marginal cost, as a share of price
  2. BEqual to marginal cost
  3. C4 times marginal cost
  4. D75% above marginal cost, as a share of price

Answer key

  1. 1. C · Government spending and taxation
  2. 2. D · The difference between what consumers are willing to pay and what they actually pay
  3. 3. D · A sustained fall in the general price level
  4. 4. A · Borrowers with fixed-rate loans
  5. 5. C · Domestic steel prices rise and domestic production increases
  6. 6. C · Increases bank reserves and the money supply
  7. 7. C · Poorer countries with similar fundamentals tend to grow faster than richer ones
  8. 8. A · 25% above marginal cost, as a share of price

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