Economics concepts worksheet with answers

A common rule of thumb defines a recession as:

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

The unemployment rate is calculated as:

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

GDP measures:

1. AThe government's budget
2. BThe total market value of final goods and services produced in a country in a period
3. CThe value of all exports only
4. DThe total wealth and savings held by a country's citizens and firms at the end of a year

Using the expenditure approach, GDP equals:

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

A country has 950 employed people and 50 unemployed people seeking work. Its unemployment rate is:

1. A5.3%
2. B95%
3. C50%
4. D5%

A currency depreciation tends to:

1. AHave no effect on trade
2. BReduce the price of all domestic goods and make imports cheaper
3. CMake exports cheaper abroad and imports more expensive
4. DMake imports cheaper

According to prospect theory (Kahneman and Tversky), people typically:

1. AAlways maximise expected monetary value
2. BFeel losses more strongly than equal-sized gains
3. CTreat losses and gains of the same size as equally important
4. DPrefer risk when facing gains of any size

In the Mundell–Fleming model with perfect capital mobility and a floating exchange rate:

1. AFiscal policy is effective, but monetary policy is largely ineffective
2. BBoth policies have no effect on output
3. CBoth policies are equally effective
4. DMonetary policy is effective but fiscal policy is largely ineffective