Economics concepts worksheet with answers

A tariff is:

1. AA limit on the quantity of imports
2. BA tax on imported goods
3. CA subsidy for exporters
4. DA ban on all foreign trade

The unemployment rate is calculated as:

1. AThe number of unemployed divided by the total population
2. BThe number of job vacancies divided by the population
3. CThe number of employed divided by the labour force
4. DThe number of unemployed divided by the labour force

A progressive tax is one where:

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

The marginal propensity to consume is:

1. AThe share of an extra euro of income that is spent on consumption
2. BThe total consumption in an economy
3. CThe interest rate on consumer loans
4. DThe average share of total income that households save over a year

In country A, 1 car costs 2 tonnes of wheat to produce; in country B, 1 car costs 4 tonnes of wheat. Which statement is correct?

1. AA has a comparative advantage in cars and B in wheat
2. BB has a comparative advantage in cars and A in wheat
3. CNeither country gains from trade
4. DA has a comparative advantage in both goods

In the short run, a firm in perfect competition should shut down if the market price is below:

1. AAverage total cost
2. BMarginal revenue
3. CAverage variable cost
4. DAverage fixed cost

In the Prisoner's Dilemma, the Nash equilibrium is:

1. AOne player cooperates and the other defects, so only one of them gains
2. BThere is no equilibrium
3. CBoth players defect, even though both cooperating would be better
4. DBoth players cooperate

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

1. A49 years
2. B7 years
3. C10 years
4. D70 years