Economics concepts worksheet with answers

Adam Smith's example of the pin factory illustrated the benefits of:

1. AFree trade between countries
2. BThe division of labour
3. CGovernment regulation
4. DPrice controls

Market failure occurs when:

1. AThe stock market falls sharply
2. BThe free market allocates resources inefficiently
3. CPrices rise in a market
4. DA firm goes bankrupt

A budget deficit occurs when:

1. AGovernment spending exceeds government revenue in a year
2. BTotal government debt falls
3. CA firm's costs exceed its revenue
4. DThe value of imports exceeds the value of exports in a year

A public good is:

1. ANon-rival and non-excludable
2. BAny good bought by the government
3. CProvided only by private firms
4. DRival and excludable

A Gini coefficient of 0 indicates:

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

Stagflation is a combination of:

1. ALow inflation and low unemployment
2. BDeflation and rapid growth
3. CHigh growth and falling prices
4. DHigh inflation and high unemployment with low growth

Why does the deadweight loss of a tax grow when the good's demand and supply are more elastic?

1. AThe government collects more tax revenue
2. BQuantity traded falls more, so more mutually beneficial trades are lost
3. CElastic markets have no consumer surplus
4. DPrices do not change, so consumers bear the whole burden of the tax instead

In the Solow growth model, sustained long-run growth in output per worker comes from:

1. AA higher saving rate alone
2. BGovernment budget deficits
3. CTechnological progress
4. DPopulation growth