Q: Suppose the U.S. Bureau of Labor Statistics reports the following data for a country: the working-age population is 250 million, the labor force is 160 million, and the number of employed people is 150 million. What is the unemployment rate?

$$\frac{10}{160} \times 100 = 6.25\%$$

Q: If the Consumer Price Index (CPI) was 220 last year and 231 this year, what is the inflation rate for this year?

$$\frac{231 - 220}{220} \times 100 = 5\%$$

Q: A worker’s nominal wage increased from $$20 to 22 $$per hour over a year, while the CPI rose from 200 to 210. What is the worker’s real wage increase?

$$\frac{22}{210} \times 100 - \frac{20}{200} \times 100 = 10.48 - 10 = 0.48$$

Question 1

Suppose the U.S. Bureau of Labor Statistics reports the following data for a country: the working-age population is 250 million, the labor force is 160 million, and the number of employed people is 150 million. What is the unemployment rate?

Accepted Answer

$$\frac{10}{160} 	imes 100 = 6.25\%$$

Question 2

Which of the following best describes structural unemployment?

Accepted Answer

Unemployment caused by a mismatch between workers’ skills and the requirements of available jobs.

Question 3

A government increases unemployment benefits, making it easier for workers to remain unemployed while searching for jobs. What is the most likely effect on the unemployment rate?

Accepted Answer

The unemployment rate will likely increase due to longer job searches.

Question 4

If the Consumer Price Index (CPI) was 220 last year and 231 this year, what is the inflation rate for this year?

Accepted Answer

$$\frac{231 - 220}{220} 	imes 100 = 5\%$$

Question 5

A worker’s nominal wage increased from $$20 to 22 $$per hour over a year, while the CPI rose from 200 to 210. What is the worker’s real wage increase?

Accepted Answer

$$\frac{22}{210} 	imes 100 - \frac{20}{200} 	imes 100 = 10.48 - 10 = 0.48$$

Question 6

If the nominal interest rate on a savings account is 4\% and the inflation rate is 2\%, what is the real interest rate?

Accepted Answer

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

Question 7

Which of the following is the best measure of a country’s standard of living?

Accepted Answer

Real GDP per capita

Question 8

According to the economic growth model, which of the following would most likely increase labor productivity?

Accepted Answer

An increase in the amount of capital available to each worker

Question 9

Which of the following best explains why some poor countries have not experienced rapid economic growth, despite the prediction of economic catch-up?

Accepted Answer

Weak property rights and poor rule of law

Question 10

If the aggregate demand curve shifts to the right, which of the following is the most likely cause?

Accepted Answer

An increase in government spending

Question 11

Which of the following statements about the long-run aggregate supply (LRAS) curve is correct?

Accepted Answer

The LRAS curve is vertical because, in the long run, real GDP is at its potential level and is unaffected by the price level.

Question 12

During the expansion phase of the business cycle, which of the following typically occurs?

Accepted Answer

Production, employment, and income all increase.

Question 13

A country’s real GDP per capita increased from $$30,000 to 31$$,500 over one year. What is the economic growth rate?

Accepted Answer

$$\frac{31,500 - 30,000}{30,000} 	imes 100 = 5\%$$

Question 14

Which government policy is most likely to foster long-run economic growth?

Accepted Answer

Protecting property rights and enforcing the rule of law

Question 15

If the short-run aggregate supply (SRAS) curve shifts to the left, which of the following is a likely cause?

Accepted Answer

An increase in the cost of production, such as higher oil prices

Question 16

Which of the following scenarios best illustrates cyclical unemployment?

Accepted Answer

A factory worker loses her job because of a recession.

Question 17

If the labor force participation rate is 70\% and the working-age population is 200 million, what is the size of the labor force?

Accepted Answer

$$200 	imes 0.70 = 140$$ million

Question 18

Which of the following would cause a movement along the aggregate demand curve, rather than a shift of the curve?

Accepted Answer

A change in the price level

Question 19

In the aggregate demand and aggregate supply model, what is true in long-run macroeconomic equilibrium?

Accepted Answer

Aggregate demand, short-run aggregate supply, and long-run aggregate supply all intersect at the same point.

Macroeconomics Exam 2 Study Guide: Unemployment, Inflation, Economic Growth, and Aggregate Demand & Supply

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