Q: Suppose the real GDP in 2021 was $$21.4 trillion and in 2022 it was 21.8 $$trillion. What was the growth rate of real GDP from 2021 to 2022? Use the formula $$ \text{Growth Rate} = \frac{\text{Current Year} - \text{Previous Year}}{\text{Previous Year}} \times 100 .$$

$$ \frac{21.8 - 21.4}{21.4} \times 100 = 1.9\% $$

Q: A country has a working-age population of 200 million, a labor force of 120 million, and 110 million employed people. What is the unemployment rate? Use $$ \text{Unemployment Rate} = \frac{\text{Unemployed}}{\text{Labor Force}} \times 100 .$$

$$ \frac{10}{120} \times 100 = 8.3\% $$

Q: If the Consumer Price Index (CPI) was 120 in 2024 and 123 in 2025, what was the inflation rate from 2024 to 2025? Use $$ \text{Inflation Rate} = \frac{\text{CPI}_{2025} - \text{CPI}_{2024}}{\text{CPI}_{2024}} \times 100 .$$

$$ \frac{123 - 120}{120} \times 100 = 2.5\% $$

Question 1

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

Accepted Answer

Real GDP is measured using base-year prices, while nominal GDP uses current-year prices.

Question 2

Suppose the real GDP in 2021 was $$21.4 trillion and in 2022 it was 21.8 $$trillion. What was the growth rate of real GDP from 2021 to 2022? Use the formula $$ 	ext{Growth Rate} = \frac{	ext{Current Year} - 	ext{Previous Year}}{	ext{Previous Year}} 	imes 100 .$$

Accepted Answer

$$ \frac{21.8 - 21.4}{21.4} 	imes 100 = 1.9\% $$

Question 3

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

Accepted Answer

The purchase of a used house.

Question 4

If the growth rate of an economic variable is 5 percent per year, how many years will it take for the variable to double according to the Rule of 70?

Accepted Answer

$$ \frac{70}{5} = 14 $$ years

Question 5

Which of the following is a likely effect of a government budget deficit in the market for loanable funds?

Accepted Answer

The supply of loanable funds decreases, raising the real interest rate and reducing investment.

Question 6

Which of the following best explains why GDP per capita is not a perfect measure of economic well-being?

Accepted Answer

It does not account for the value of leisure, pollution, or income distribution.

Question 7

A country has a working-age population of 200 million, a labor force of 120 million, and 110 million employed people. What is the unemployment rate? Use $$ 	ext{Unemployment Rate} = \frac{	ext{Unemployed}}{	ext{Labor Force}} 	imes 100 .$$

Accepted Answer

$$ \frac{10}{120} 	imes 100 = 8.3\% $$

Question 8

Which of the following is an example of structural unemployment?

Accepted Answer

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

Question 9

If the Consumer Price Index (CPI) was 120 in 2024 and 123 in 2025, what was the inflation rate from 2024 to 2025? Use $$ 	ext{Inflation Rate} = \frac{	ext{CPI}_{2025} - 	ext{CPI}_{2024}}{	ext{CPI}_{2024}} 	imes 100 .$$

Accepted Answer

$$ \frac{123 - 120}{120} 	imes 100 = 2.5\% $$

Question 10

Which of the following is a cost of unanticipated inflation?

Accepted Answer

It redistributes income between borrowers and lenders in unpredictable ways.

Question 11

Which of the following policies would most likely reduce structural unemployment?

Accepted Answer

Providing retraining programs for workers whose jobs have been automated.

Question 12

If the nominal interest rate on a loan is 6% and the inflation rate is 2%, what is the real interest rate?

Accepted Answer

$$ 6\% - 2\% = 4\% $$

Question 13

Which of the following would cause the demand for loanable funds to increase?

Accepted Answer

An increase in expected future profits from new investments.

Question 14

Which of the following is an example of frictional unemployment?

Accepted Answer

A worker is between jobs and searching for a better match.

Question 15

Suppose the government introduces a new tax benefit for saving, such as a 401(k) retirement account. What is the likely effect in the market for loanable funds?

Accepted Answer

The supply of loanable funds shifts right, lowering the real interest rate and increasing investment.

Question 16

Which of the following is a shortcoming of using GDP as a measure of total production?

Accepted Answer

It excludes the value of the underground economy.

Question 17

If the GDP deflator in 2021 is 110.2 and in 2022 is 118.0, what is the inflation rate between these years? Use $$ 	ext{Inflation Rate} = \frac{118.0 - 110.2}{110.2} 	imes 100 .$$

Accepted Answer

$$ \frac{118.0 - 110.2}{110.2} 	imes 100 = 7.1\% $$

Question 18

Which of the following is an example of cyclical unemployment?

Accepted Answer

A worker is laid off because their factory closes during a recession.

Question 19

Which of the following is a service provided by the financial system that facilitates long-run economic growth?

Accepted Answer

It provides risk sharing, liquidity, and information to savers and borrowers.

Question 20

Which of the following would NOT be considered part of the labor force?

Accepted Answer

A person who is retired and not seeking employment.

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

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