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

A progressive tax is one where:

  1. AEveryone pays the same percentage of income
  2. BThe proportion of income paid in tax rises as income rises
  3. CEveryone pays the same amount of tax
  4. DThe proportion of income paid falls as income rises
2.Easy

Deflation is:

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

Structural unemployment is caused by:

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

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

  1. AMore cheaply in absolute terms than every other country
  2. BAt a lower opportunity cost than other countries
  3. CWith the most workers
  4. DOnly for its own consumption
5.Medium

The marginal cost curve cuts the average total cost curve:

  1. AWhere average total cost equals zero
  2. BNever, as the two curves are parallel
  3. CAt the minimum point of average total cost
  4. DAt the maximum point of average total cost
6.Medium

Overfishing in international waters is an example of:

  1. AA Giffen good
  2. BPrice discrimination
  3. CThe tragedy of the commons
  4. DA natural monopoly
7.Hard

The "convergence hypothesis" from the Solow model predicts that:

  1. AAll countries will eventually have the same population
  2. BRich countries always grow faster than poor ones, because they have more capital
  3. CPoorer countries with similar fundamentals tend to grow faster than richer ones
  4. DExchange rates converge to a fixed value
8.Hard

A liquidity trap is a situation where:

  1. AInterest rates are near zero and further monetary expansion has little effect on demand
  2. BThe central bank raises interest rates sharply to fight high and rapidly rising inflation
  3. CBanks have no money left to lend
  4. DInflation is very high and rising

Answer key

  1. 1. B · The proportion of income paid in tax rises as income rises
  2. 2. C · A sustained fall in the general price level
  3. 3. A · A mismatch between workers' skills or location and the jobs available
  4. 4. B · At a lower opportunity cost than other countries
  5. 5. C · At the minimum point of average total cost
  6. 6. C · The tragedy of the commons
  7. 7. C · Poorer countries with similar fundamentals tend to grow faster than richer ones
  8. 8. A · Interest rates are near zero and further monetary expansion has little effect on demand

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