Q: Suppose nominal GDP in 2022 is $$\2$${,}000$$ and real GDP in 2022 (using 2020 as the base year) is $$\$$1{,}600. $$What is the GDP deflator for 2022?

$$\displaystyle \frac{2000}{1600} \times 100 = 125$$

Q: If the labor force consists of 950 employed and 50 unemployed individuals, what is the U-3 unemployment rate?

$$\displaystyle \frac{50}{1000} \times 100 = 5\%$$

Question 1

Suppose the price of coffee increases, and as a result, the quantity of coffee demanded falls, ceteris paribus. Which economic principle does this scenario best illustrate?

Accepted Answer

The law of demand

Question 2

If the price of printers rises, what is the most likely effect on the demand for ink cartridges, assuming all other factors remain constant?

Accepted Answer

The demand for ink cartridges will decrease

Question 3

A bakery buys flour to make bread, and a student buys a loaf of bread to eat. Which of the following statements is correct regarding GDP?

Accepted Answer

The bread bought by the student is counted in GDP, but the flour bought by the bakery is not

Question 4

Which of the following would cause a movement along the supply curve for smartphones, rather than a shift of the supply curve?

Accepted Answer

A decrease in the price of smartphones

Question 5

Suppose nominal GDP in 2022 is $$\2$${,}000$$ and real GDP in 2022 (using 2020 as the base year) is $$\$$1{,}600. $$What is the GDP deflator for 2022?

Accepted Answer

$$\displaystyle \frac{2000}{1600} 	imes 100 = 125$$

Question 6

A country exports $$\90$ billion worth of goods and imports $$\$$120$$ billion. What is the value of net exports (NX) for this country?

Accepted Answer

$$\displaystyle 90 - 120 = -30$$

Question 7

If the labor force consists of 950 employed and 50 unemployed individuals, what is the U-3 unemployment rate?

Accepted Answer

$$\displaystyle \frac{50}{1000} 	imes 100 = 5\%$$

Question 8

Which of the following is an example of a leakage in the circular flow model?

Accepted Answer

Households saving part of their income

Question 9

A firm planned to invest $$\100$$,000$$ in new equipment, but due to weak sales, its inventories unexpectedly increased by $$\$$20,000. $$What is the firm's actual investment?

Accepted Answer

$$\displaystyle 100{,}000 + 20{,}000 = 120{,}000$$

Question 10

If the price of Pepsi rises, what is the most likely effect on the demand for Coca-Cola, assuming all other factors remain constant?

Accepted Answer

The demand for Coca-Cola will increase

Question 11

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

Accepted Answer

Nominal GDP uses current prices; real GDP uses base-year prices

Question 12

Suppose the price index rises from 120 to 126 in one year. What is the inflation rate for that year?

Accepted Answer

$$\displaystyle \frac{126 - 120}{120} 	imes 100 = 5\%$$

Question 13

Which of the following would be considered an injection in the circular flow model?

Accepted Answer

Government spending on new schools

Question 14

If the supply of a product increases while demand remains unchanged, what happens to equilibrium price and quantity?

Accepted Answer

Equilibrium price falls; equilibrium quantity rises

Question 15

A new technology reduces the cost of producing electric cars. What is the most likely effect on the market for electric cars, assuming demand is unchanged?

Accepted Answer

Supply increases, shifting right; equilibrium price falls and quantity rises

Question 16

Which of the following is NOT included in the calculation of GDP using the expenditure approach?

Accepted Answer

Social Security payments to retirees

Question 17

If a country experiences a sustained rise in the overall price level, this is best described as:

Accepted Answer

Inflation

Question 18

A worker who wants a job, is available for work, but has not actively searched in the past four weeks is classified as:

Accepted Answer

Marginally attached to the labor force

Question 19

Suppose real GDP in 2021 was $$\2$${,}000$$ and in 2022 it was $$\$$2{,}100. $$What was the real GDP growth rate?

Accepted Answer

$$\displaystyle \frac{2100 - 2000}{2000} 	imes 100 = 5\%$$

Question 20

Which of the following best describes the 'invisible hand' as proposed by Adam Smith?

Accepted Answer

Self-interest and price signals coordinate decentralized markets

Macroeconomics Core Concepts: Flashcard Study Guide

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