15 Economics Interview Questions and Answers

In the business world, economics is an inescapable topic. Whether you’re interviewing for a job in finance, consulting, or another field, you’re likely to encounter questions about economics during the interview process.

While some economics interview questions may be specific to the role you’re interviewing for, others will be more general in nature. Either way, it’s important to be prepared to answer both types of questions confidently.

To help you prepare, we’ve compiled a list of common economics interview questions and answers. Whether you’re a recent graduate or an experienced professional, these tips will help you ace your next economics interview.

1. What is Economics?

This question is a basic one that an interviewer may ask to see if you have the necessary knowledge of economics. To answer this question, define what economics is and how it relates to other fields.

Example: “Economics is the study of production, consumption, distribution and exchange of goods and services in society. It’s also about how individuals, businesses and governments make decisions that affect these factors. Economics is closely related to business, finance and accounting because they all involve money. For example, I worked as an accountant for five years before moving into my current role as an economist.”

2. Can you explain the difference between microeconomics and macroeconomics?

This question is a great way to test your knowledge of the two main branches of economics. It also allows you to show that you can apply what you know about microeconomics and macroeconomics to real-world situations.

Example: “Microeconomics focuses on individual markets, such as the market for coffee or cars. Macroeconomics looks at the economy as a whole, including factors like unemployment rates and inflation rates. Microeconomics helps us understand how individuals make decisions in relation to supply and demand, while macroeconomics helps us understand how those decisions affect the entire economy.”

3. What are some of the common economic indicators used for measuring the health of an economy?

This question can help the interviewer assess your knowledge of economic indicators and how they relate to an economy. Use examples from your previous work experience or explain what you would use if you were in a similar position.

Example: “There are many common economic indicators that measure the health of an economy, including gross domestic product, unemployment rate, consumer price index, personal consumption expenditures and industrial production. These indicators provide insight into the financial well-being of a country’s citizens and businesses by measuring factors like inflation, employment rates and spending habits.”

4. Can you give me an example of a leading and lagging indicator?

This question is a great way to test your knowledge of economic indicators. Leading and lagging indicators are important for economists to understand because they help them predict future trends in the economy. When answering this question, it can be helpful to give an example of each type of indicator.

Example: “A leading indicator predicts what’s going to happen in the economy before it actually happens. For instance, if consumer confidence is high, that means people feel good about their financial situation and may spend more money. This leads to increased sales at businesses, which then leads to job growth. A lagging indicator is something that occurs after the event has already happened. If there is a recession, unemployment will rise as people lose their jobs.”

5. What do you understand about laws of supply and demand?

This question is a great way to test your knowledge of basic economic principles. You can use it as an opportunity to show the interviewer that you understand how these laws work and how they apply to different situations.

Example: “Supply and demand are two sides of the same coin, so I think it’s important to consider them together when making decisions about supply and demand in the market. For example, if there is a high level of demand for a product but low supply, then the price will increase. If there is a high level of supply with low demand, then the price will decrease. These laws help me make informed decisions about pricing and production.”

6. Can you explain what elasticity means in economics?

Elasticity is a term that’s used frequently in economics. Interviewers may ask this question to see if you have the ability to explain complex economic concepts simply and clearly. In your answer, try to define elasticity briefly and give an example of how it can be applied in real-world situations.

Example: “Elasticity refers to the responsiveness of one variable to changes in another variable. For instance, when there are price increases for goods or services, consumers will often look for alternatives. This is known as elasticity of demand because the consumer’s demand for a good or service decreases when its price goes up. Elasticity is important in economics because it helps us understand how different factors affect our economy.”

7. What do you know about game theory?

Game theory is a branch of economics that focuses on the strategies people use to compete with each other. Employers may ask this question to see if you have any experience using game theory in your previous roles. If you do, they might also want to know how you used it and what results you achieved. If you don’t have much experience with game theory, consider researching some basic concepts before your interview so you can answer questions about them confidently.

Example: “I’ve never had an opportunity to apply game theory in my career, but I did take a class on it in college. I found it fascinating because it’s essentially a way to predict human behavior based on incentives. For example, if someone knows they’ll get $100 for completing a task, they’re more likely to complete it than if they only knew they’d receive $50. Game theory helps us understand why humans make certain decisions.”

8. What’s your understanding of positive, normative, and welfare economics?

This question is a great way to test your knowledge of the three main types of economics. You can use this opportunity to show that you have a strong understanding of each type and how they apply to real-world situations.

Example: “Positive, normative and welfare economics are all different approaches to studying economic issues. Positive economics focuses on describing what exists in the economy while normative economics looks at what should exist. Welfare economics examines how well an economy functions for its citizens. I find these distinctions helpful when analyzing current events because it helps me understand which approach would be most useful for making decisions.”

9. What’s the law of diminishing returns?

This is a basic economic concept that employers may ask you about to test your knowledge of the field. The law of diminishing returns states that as more and more inputs are added to a production process, the marginal return on each input will eventually decline until it’s no longer worth adding more. You can use this question to show an employer that you understand how the economy works at its most fundamental level.

Example: “The law of diminishing returns says that when you add more and more resources to a production process, the value of those resources will eventually decrease. For example, if I were to hire one worker to make 100 widgets per day, then two workers to make 150 widgets per day and finally three workers to make 200 widgets per day, the third worker would produce fewer widgets than the second worker. This is because there are limits to what any single person can do in a given time period.”

10. How does an economist measure utility?

Utility is a measurement of how much utility an individual gets from consuming a good or service. Utility can be measured in several ways, and the interviewer may want to know that you understand the different methods used by economists. In your answer, explain what utility is and give examples of how it’s measured.

Example: “Utility is a measure of satisfaction derived from consumption. Economists use two main methods for measuring utility. The first method is revealed preference, which measures utility based on consumer choices. For example, if I buy a certain brand of cereal over another, this indicates that I derive more utility from eating that brand of cereal than the other one. Another way we can measure utility is through stated preference, where consumers are asked about their preferences.”

11. What are the differences among nominal GDP, real GDP, and per capita GDP?

This question tests your knowledge of the different types of GDP and how they relate to one another. You can answer this question by defining each type of GDP, explaining what makes them unique from one another and giving an example of when you’ve used these metrics in a professional setting.

Example: “Nominal GDP is the total market value of all goods and services produced within a country during a specific time period. Real GDP takes nominal GDP and adjusts it for inflation or deflation. Per capita GDP divides real GDP by the population of a country. I have used per capita GDP before to determine which states are most economically prosperous.”

12. Can you explain what the Phillips curve is?

The Phillips curve is a relationship between unemployment and inflation. Employers may ask this question to see if you have the knowledge needed to understand economic data. In your answer, try to explain what the Phillips curve is and how it relates to other economic indicators. You can also mention that the Federal Reserve uses the Phillips curve to make decisions about interest rates.

Example: “The Phillips curve is a relationship between unemployment and inflation. It shows that when unemployment is low, there’s usually more inflation. The Federal Reserve uses the Phillips curve to decide whether or not to raise or lower interest rates. If they want to increase employment, they’ll lower interest rates. This makes borrowing money cheaper for businesses, which encourages them to hire more employees. However, raising interest rates will slow down the economy because people won’t be able to afford as much.”

13. How do economists measure inflation?

Inflation is a common economic term that employers may ask you about during an interview. They might want to know how economists measure inflation and what the factors are that influence it. You can answer this question by explaining the different methods used to calculate inflation, such as the consumer price index (CPI) and the GDP deflator.

Example: “Inflation is measured using two main approaches—the CPI and the GDP deflator. The CPI measures inflation by comparing the cost of goods and services over time. It’s calculated by dividing the current cost of a basket of goods by its previous cost. The GDP deflator uses the same method but compares the cost of all final goods and services produced in the economy with their previous cost.”

14. How can we use data to predict future trends in the economy?

This question can help the interviewer assess your ability to use data and information to make predictions about future economic trends. Use examples from past experiences where you used data analysis to predict future events in the economy.

Example: “In my last role, I was responsible for analyzing large amounts of data to determine how it could be applied to predicting future trends in the economy. For example, one project I worked on involved using historical data to predict what would happen if a certain policy change were made by the government. This helped me understand how important it is to have access to accurate data when making predictions about future economic trends.”

15. Why should we not rely solely on historical data when making predictions about the future?

This question is a great way to test your critical thinking skills and ability to apply them in the workplace. It also shows that you understand how important it is to consider other factors when making predictions about economic trends.

Example: “Historical data can be useful for predicting future events, but there are many other factors that should be considered as well. For example, if historical data showed that sales were down last year, but this year’s sales have increased by 20%, we would not know whether or not those numbers are sustainable. We need to look at current conditions to determine what will happen next.”