Economics concepts worksheet with answers

Price elasticity of demand measures:

1. AHow responsive quantity demanded is to a change in price
2. BHow responsive quantity supplied is to changes in consumer income
3. CHow quickly prices change over time
4. DHow much firms can raise their prices

Fiscal policy uses:

1. AInterest rates set by the central bank
2. BGovernment spending and taxation
3. CExchange rate controls only
4. DTrade agreements only

A common rule of thumb defines a recession as:

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

A public good is:

1. ARival and excludable
2. BProvided only by private firms
3. CAny good bought by the government
4. DNon-rival and non-excludable

Unemployment benefits and progressive income taxes are called automatic stabilisers because they:

1. APrevent all recessions from happening
2. BFix the exchange rate automatically
3. CReduce fluctuations in demand without new government decisions
4. DKeep the government budget balanced in every year of the business cycle

In a simple closed economy without taxes, the MPC is 0.8. The Keynesian spending multiplier is:

1. A5
2. B1.25
3. C8
4. D0.8

In the "Battle of the Sexes" coordination game, how many pure-strategy Nash equilibria are there?

1. AOne
2. BNone
3. CTwo
4. DFour

In the Solow growth model, sustained long-run growth in output per worker comes from:

1. AGovernment budget deficits
2. BPopulation growth
3. CTechnological progress
4. DA higher saving rate alone