Economics concepts worksheet with answers

A market with only one seller is called:

1. AA monopsony
2. BAn oligopoly
3. CPerfect competition
4. DA monopoly

Which statement is a normative statement?

1. AHigher prices reduce quantity demanded
2. BUnemployment fell to 4% in June
3. CThe minimum wage rose by 3% last year
4. DThe government should raise the minimum wage

What is opportunity cost?

1. AThe price of a product during a sale
2. BThe value of the best alternative given up when making a choice
3. CThe total money spent on a purchase, including any taxes and fees
4. DThe cost of starting a new business

In perfect competition in the long run, firms earn:

1. AMonopoly profits
2. BLarge economic profits
3. CZero economic profit
4. DLosses forever

If the ECB raises its main interest rate, the most likely short-term effect is:

1. AAn immediate rise in GDP
2. BLower borrowing and spending, reducing inflationary pressure
3. CHigher borrowing and spending, which adds to inflationary pressure
4. DA fall in the value of the euro

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

1. A50%
2. B5.3%
3. C5%
4. D95%

For a normal good, when its price falls, the substitution effect and income effect:

1. ABoth decrease the quantity demanded
2. BWork in opposite directions
3. CCancel out exactly
4. DBoth increase the quantity demanded

Purchasing power parity (PPP) suggests that, in the long run, exchange rates adjust so that:

1. ATrade balances are always zero
2. BEvery currency ends up having the same nominal value as the US dollar
3. CInterest rates are equal in all countries
4. DThe same basket of goods costs the same in different countries