Question 1

Suppose a country can produce either 100 units of wheat or 200 units of corn using all its resources. What is the opportunity cost of producing one unit of wheat?

Accepted Answer

$$2$$ units of corn$

Question 2

Which of the following best describes the concept of comparative advantage?

Accepted Answer

The ability to produce a good at a lower opportunity cost than another producer

Question 3

If the government increases the minimum wage above the equilibrium wage, what is the most likely outcome in the labor market?

Accepted Answer

An increase in unemployment

Question 4

Which of the following is included in the calculation of GDP using the expenditure approach?

Accepted Answer

Government spending on new infrastructure

Question 5

If the Consumer Price Index (CPI) increases from $$120 to$$ $$126$$ over a year, what is the annual inflation rate?

Accepted Answer

$$5\%$$

Question 6

Suppose the nominal GDP of a country increases by $$8\%$$ while the GDP deflator increases by $$3\%. $$What is the real GDP growth rate?

Accepted Answer

$$5\%$$

Question 7

Which of the following would cause the aggregate demand curve to shift to the right?

Accepted Answer

An increase in consumer confidence

Question 8

If the real interest rate in the United States rises relative to other countries, what is the likely effect on the U.S. dollar in the foreign exchange market?

Accepted Answer

The U.S. dollar will appreciate

Question 9

Which of the following best explains why the long-run aggregate supply curve is vertical?

Accepted Answer

Because prices and wages are flexible in the long run

Question 10

If a country has a trade deficit, which of the following must be true?

Accepted Answer

Its imports exceed its exports

Question 11

Suppose the money supply increases by $$10\%$$ and the velocity of money is constant. According to the quantity theory of money, what will happen to the price level in the long run if real output is unchanged?

Accepted Answer

The price level will increase by $$10\%$$

Question 12

Which of the following is NOT a function of money?

Accepted Answer

Source of production

Question 13

If the unemployment rate is $$6\%$$ and the labor force participation rate is $$70\%$$, which of the following statements is true?

Accepted Answer

94\% of the labor force is employed

Question 14

Which of the following would be considered an example of frictional unemployment?

Accepted Answer

A recent college graduate searching for their first job

Question 15

If the reserve requirement is $$10\%$$ and a bank receives a new deposit of $$\1$$,000$, what is the maximum amount of new money that can be created in the banking system?

Accepted Answer

$$\10$$,000$

Question 16

Which of the following policies would the Federal Reserve use to decrease the money supply?

Accepted Answer

Raising the reserve requirement

Question 17

If the real exchange rate between the U.S. and Japan increases, what is the likely effect on U.S. net exports?

Accepted Answer

U.S. net exports will decrease

Question 18

Which of the following best explains the difference between nominal and real GDP?

Accepted Answer

Nominal GDP is measured in current prices, while real GDP is adjusted for inflation

Question 19

Suppose the government runs a budget deficit. According to the loanable funds model, what is the likely effect on the real interest rate?

Accepted Answer

The real interest rate will increase

Question 20

If a country experiences technological progress, which of the following is most likely to occur in the long run?

Accepted Answer

An increase in real GDP per capita

Comprehensive Study Guide: Core Topics in Macroeconomics

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