Economics concepts worksheet with answers

Structural unemployment is caused by:

1. AThe normal time that workers take to search for and move between jobs
2. BA temporary fall in aggregate demand
3. CA mismatch between workers' skills or location and the jobs available
4. DSeasonal changes in demand for labour

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

1. AAn inferior good
2. BA normal good
3. CA public good
4. DA Giffen good

Macroeconomics studies:

1. AThe economy as a whole, such as inflation, unemployment and growth
2. BThe accounts of a single company
3. CThe decisions of individual households and firms in particular markets
4. DOnly the stock market

Overfishing in international waters is an example of:

1. APrice discrimination
2. BThe tragedy of the commons
3. CA natural monopoly
4. DA Giffen good

A savings account pays a nominal interest rate of 6% and inflation is 4%. The approximate real interest rate is:

1. A1.5%
2. B2%
3. C24%
4. D10%

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

1. ARaises tax revenue for the government
2. BHas no effect on the money supply
3. CReduces bank reserves and so shrinks the money supply
4. DIncreases bank reserves and the money supply

The Coase theorem states that, if property rights are clearly defined and transaction costs are low:

1. AGovernments must always tax externalities
2. BThe polluter must always compensate the victim
3. CPrivate bargaining can reach an efficient outcome regardless of who holds the rights
4. DExternalities cannot be corrected without direct government regulation or a Pigouvian tax

Moral hazard arises when:

1. ATwo firms collude on price
2. BPrices are too high for poor consumers
3. CA buyer cannot observe product quality before buying, so low-quality sellers dominate the market
4. DOne party changes behaviour after a contract because they do not bear the full consequences