Economics concepts worksheet with answers

Unemployment caused by people moving between jobs is called:

1. AFrictional unemployment
2. BCyclical unemployment
3. CSeasonal unemployment
4. DStructural unemployment

What is opportunity cost?

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

Which statement is a normative statement?

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

Education generates benefits for society beyond the individual student. Without intervention, the market will likely:

1. AOver-provide education compared with the social optimum
2. BProvide exactly the efficient amount of education, as prices reflect all benefits
3. CStop providing education altogether
4. DUnder-provide education compared with the social optimum

Unexpectedly high inflation tends to benefit:

1. ASavers holding cash
2. BPensioners on fixed nominal incomes
3. CLenders who receive fixed interest payments
4. DBorrowers with fixed-rate loans

Comparative advantage means a country should specialise in goods it can produce:

1. AWith the most workers
2. BMore cheaply in absolute terms than every other country
3. COnly for its own consumption
4. DAt a lower opportunity cost than other countries

Using the "rule of 70", an economy growing at 7% per year will double its real GDP in about:

1. A10 years
2. B49 years
3. C70 years
4. D7 years

The "Taylor principle" says that, to stabilise inflation, a central bank should respond to a 1 percentage point rise in inflation by:

1. AKeeping the nominal rate unchanged
2. BCutting the nominal rate
3. CRaising the nominal interest rate, but by less than 1 percentage point
4. DRaising the nominal interest rate by more than 1 percentage point