Q: Suppose the nominal GDP of a country in 2020 is $$\5$ trillion and the real GDP (in 2015 dollars) is $$\$$4$$ trillion. What is the GDP deflator for 2020?

$$\frac{5}{4} \times 100 = 125$$

Q: If the CPI was 120 in 2010 and 132 in 2011, what was the inflation rate between 2010 and 2011?

$$\frac{132 - 120}{120} \times 100 = 10\%$$

Q: A country has 150 million employed workers, 10 million unemployed workers, and a working-age population of 200 million. What is the labor force participation rate?

$$\frac{160}{200} \times 100 = 80\%$$

Q: Suppose the real GDP in 2018 was $$\2$ trillion and in 2019 it was $$\$$2.2$$ trillion. What was the economic growth rate from 2018 to 2019?

$$\frac{2.2 - 2}{2} \times 100 = 10\%$$

Q: If the CPI in 1990 was 130 and in 2020 it was 260, what would be the equivalent of $$\10$$,000$ in 1990 dollars in 2020 dollars?

$$10,000 \times \frac{260}{130} = \20$$,000$

Question 1

Suppose the nominal GDP of a country in 2020 is $$\5$ trillion and the real GDP (in 2015 dollars) is $$\$$4$$ trillion. What is the GDP deflator for 2020?

Accepted Answer

$$\frac{5}{4} 	imes 100 = 125$$

Question 2

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

Accepted Answer

Nominal GDP is measured using current prices, while real GDP is measured using constant base-year prices.

Question 3

If the CPI was 120 in 2010 and 132 in 2011, what was the inflation rate between 2010 and 2011?

Accepted Answer

$$\frac{132 - 120}{120} 	imes 100 = 10\%$$

Question 4

A country has 150 million employed workers, 10 million unemployed workers, and a working-age population of 200 million. What is the labor force participation rate?

Accepted Answer

$$\frac{160}{200} 	imes 100 = 80\%$$

Question 5

Which of the following is an example of structural unemployment?

Accepted Answer

A factory worker loses their job because their skills are no longer needed due to automation.

Question 6

If the nominal interest rate is $$8\%$$ and the inflation rate is $$3\%$$, what is the real interest rate?

Accepted Answer

$$8\% - 3\% = 5\%$$

Question 7

Suppose the real GDP in 2018 was $$\2$ trillion and in 2019 it was $$\$$2.2$$ trillion. What was the economic growth rate from 2018 to 2019?

Accepted Answer

$$\frac{2.2 - 2}{2} 	imes 100 = 10\%$$

Question 8

Which of the following would NOT be included in the calculation of GDP?

Accepted Answer

The purchase of a used car from a friend.

Question 9

If the government increases its borrowing, causing the real interest rate to rise and private investment to fall, this is an example of:

Accepted Answer

Crowding out

Question 10

A discouraged worker is best described as:

Accepted Answer

Someone who has stopped looking for work because they believe no jobs are available for them.

Question 11

If the CPI in 1990 was 130 and in 2020 it was 260, what would be the equivalent of $$\10$$,000$ in 1990 dollars in 2020 dollars?

Accepted Answer

$$10,000 	imes \frac{260}{130} = \20$$,000$

Question 12

Which of the following is a shortcoming of using GDP as a measure of economic well-being?

Accepted Answer

GDP does not account for the value of household production or the underground economy.

Question 13

If the working-age population is 250 million, the labor force is 180 million, and the number of employed workers is 165 million, what is the unemployment rate?

Accepted Answer

$$\frac{15}{180} 	imes 100 = 8.33\%$$

Question 14

Which of the following would cause the demand curve for loanable funds to shift to the right?

Accepted Answer

An increase in expected profitability of investment projects by firms.

Question 15

If the growth rate of real GDP is $$3.5\%$$, approximately how many years will it take for real GDP to double according to the Rule of 70?

Accepted Answer

$$\frac{70}{3.5} = 20$$ years

Question 16

Which of the following is most likely to increase long-run economic growth?

Accepted Answer

An increase in labor productivity due to technological innovation.

Question 17

If actual inflation is higher than expected inflation, who is most likely to benefit?

Accepted Answer

Borrowers with fixed-rate loans.

Question 18

Which of the following is NOT a determinant of labor productivity?

Accepted Answer

The unemployment rate.

Question 19

Suppose the nominal wage increased by $$4\%$$ over the past year, and the inflation rate was $$2\%. $$What was the percentage change in the real wage?

Accepted Answer

$$4\% - 2\% = 2\%$$

Question 20

Which of the following best describes the role of financial intermediaries in the economy?

Accepted Answer

They channel funds from savers to borrowers, providing risk sharing, liquidity, and information.

Macroeconomics Exam 1 Study Guide: GDP, Unemployment, Inflation, and Economic Growth

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