Economics concepts worksheet with answers

The current account of the balance of payments mainly records:

1. AChanges in the government's debt
2. BThe central bank's interest rate decisions
3. CPurchases and sales of foreign companies, shares, bonds and other assets
4. DTrade in goods and services, primary income and current transfers

If supply increases while demand stays the same, the equilibrium price will usually:

1. AFall
2. BRise
3. CBecome zero
4. DStay exactly the same

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 unemployed divided by the total population
4. DThe number of job vacancies divided by the population

A Gini coefficient of 0 indicates:

1. AZero economic growth
2. BPerfect inequality of income
3. CZero unemployment
4. DPerfect equality of income

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. BA has a comparative advantage in both goods
3. CB has a comparative advantage in cars and A in wheat
4. DNeither country gains from trade

In perfect competition in the long run, firms earn:

1. AMonopoly profits
2. BZero economic profit
3. CLarge economic profits
4. DLosses forever

A liquidity trap is a situation where:

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

Okun's law describes:

1. AA positive relationship between inflation and nominal interest rates over time
2. BThe link between money supply and prices
3. CA negative relationship between output growth and changes in unemployment
4. DThe relationship between tax rates and revenue