Question 1

Suppose a country produces only three goods: cars, computers, and bread. In 2022, the quantities and prices are as follows: 100 cars at $$20,000 each, 200 computers at 1$$,000 each, and 10,000 loaves of bread at $$2 each. In 2023, the quantities are the same, but prices rise to 22$$,000 per car, $$1,100 per computer, and 2.20 $$per loaf of bread. If 2022 is the base year, what is the real GDP in 2023?

Accepted Answer

$$\2$$,200,000$

Question 2

Which of the following best describes the difference between GDP and GNP?

Accepted Answer

GDP measures production within a country's borders, while GNP measures the value of goods and services produced by a country's citizens, regardless of location.

Question 3

If nominal GDP in 2020 is $$\1$$,000$$ billion and the GDP deflator is 120$, what is real GDP in 2020?

Accepted Answer

$$\833.33$ billion

Question 4

Which of the following is NOT included in the calculation of GDP?

Accepted Answer

The sale of used furniture at a garage sale

Question 5

Suppose the CPI was $$200 in 2021 $$and $$210 in 2022. $$What was the inflation rate between 2021 and 2022?

Accepted Answer

$$5\%$$

Question 6

Which of the following best explains why the unemployment rate may understate the true level of unemployment?

Accepted Answer

It counts part-time workers as fully employed.

Question 7

A country has a labor force of 50 million people. 47 million are employed, 2 million are unemployed, and 1 million are discouraged workers. What is the unemployment rate?

Accepted Answer

$$4\%$$

Question 8

Which of the following is an example of structural unemployment?

Accepted Answer

A factory worker whose job is replaced by automation

Question 9

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

Accepted Answer

$$5\%$$

Question 10

Which of the following best describes the concept of 'crowding out' in the loanable funds market?

Accepted Answer

Government borrowing increases interest rates, reducing private investment.

Question 11

Suppose the per worker production function is $$Y = A K$$^{0.5}$$ L$$^{0.5}$$, where A$ is total factor productivity, K$ is capital, and L$ is labor. If A$ doubles, what happens to output Y$?

Accepted Answer

Output $$Y$$ doubles.

Question 12

Which of the following is a problem with using GDP per capita as a measure of economic well-being?

Accepted Answer

It does not account for income distribution or non-market transactions.

Question 13

If the labor force participation rate is $$60\%$$ and the working-age population is 100 million, what is the size of the labor force?

Accepted Answer

60 million

Question 14

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

Accepted Answer

A worker who leaves a job to move to another city

Question 15

If the government increases transfer payments but does not increase taxes, what is the likely short-term effect on GDP?

Accepted Answer

GDP will increase due to higher consumption.

Question 16

Which of the following best describes the 'natural rate of unemployment'?

Accepted Answer

The unemployment rate when cyclical unemployment is zero.

Question 17

If the price level increases from $$120 to$$ $$132$$, what is the inflation rate?

Accepted Answer

$$10\%$$

Question 18

Which of the following is an example of a final good?

Accepted Answer

A new car purchased by a household

Question 19

Suppose the nominal wage increases by $$4\%$$ and the inflation rate is $$2\%. $$What is the real wage growth?

Accepted Answer

$$2\%$$

Question 20

Which of the following is a cost of unexpected inflation?

Accepted Answer

It redistributes wealth from lenders to borrowers.

Macroeconomics Study Guide: GDP, Unemployment, Economic Growth, and the Loanable Funds Market

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