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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1.Easy

Deflation is:

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

Two goods are complements if:

  1. AA rise in the price of one reduces demand for the other
  2. BThey have the same price
  3. COne can easily replace the other
  4. DDemand for both rises when the price of either one of them rises
3.Easy

Fixed costs are costs that:

  1. ADo not change with the level of output in the short run
  2. BRise in proportion to each unit produced
  3. CCan be avoided entirely by producing nothing in the short run
  4. DAre paid only when the firm makes a profit
4.Medium

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

  1. AHas no effect on the money supply
  2. BRaises tax revenue for the government
  3. CIncreases bank reserves and the money supply
  4. DReduces bank reserves and so shrinks the money supply
5.Medium

A Nash equilibrium is a situation where:

  1. AAll players achieve the highest possible total payoff
  2. BOne player has won and the others have lost
  3. CThe players agree to cooperate through a binding contract that maximises their combined total payoff
  4. DNo player can improve their payoff by changing strategy alone, given the others' strategies
6.Medium

A price ceiling set below the equilibrium price typically causes:

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

The "paradox of thrift" suggests that if all households try to save more during a recession:

  1. AInflation will increase
  2. BInvestment and growth will rise immediately
  3. CTotal income may fall, so total saving does not rise
  4. DInterest rates will rise sharply
8.Hard

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

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

Answer key

  1. 1. B · A sustained fall in the general price level
  2. 2. A · A rise in the price of one reduces demand for the other
  3. 3. A · Do not change with the level of output in the short run
  4. 4. C · Increases bank reserves and the money supply
  5. 5. D · No player can improve their payoff by changing strategy alone, given the others' strategies
  6. 6. B · A shortage
  7. 7. C · Total income may fall, so total saving does not rise
  8. 8. A · Monetary policy is effective but fiscal policy is largely ineffective

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