Economics concepts worksheet with answers

According to the law of demand, when the price of a normal good rises (other things equal):

1. AThe quantity demanded rises
2. BDemand shifts to the right
3. CThe quantity demanded falls
4. DSupply falls

A progressive tax is one where:

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

The unemployment rate is calculated as:

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

A Nash equilibrium is a situation where:

1. AAll players achieve the highest possible total payoff
2. BNo player can improve their payoff by changing strategy alone, given the others' strategies
3. CThe players agree to cooperate through a binding contract that maximises their combined total payoff
4. DOne player has won and the others have lost

A public good is:

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

In the long run in monopolistic competition, firms typically:

1. AEarn zero economic profit and have excess capacity
2. BEarn large economic profits protected by entry barriers
3. CProduce at the minimum of average total cost
4. DCharge a price equal to marginal cost

The Marshall–Lerner condition states that a currency depreciation improves the trade balance if:

1. AThe country has a budget surplus
2. BExports and imports have zero price elasticity
3. CInterest rates rise at the same time
4. DThe sum of the price elasticities of demand for exports and imports exceeds 1

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