Q: Suppose the Consumer Price Index (CPI) increased from 220 to 242 over one year. What is the annual inflation rate?

$$ \frac{242 - 220}{220} \times 100 = 10\% $$

Q: Which equation correctly represents the calculation of GDP using the income approach?

$$ \text{GDP} = \text{Wages} + \text{Rent} + \text{Interest} + \text{Profits} $$

Q: A country has a nominal GDP of $500 billion and a GDP deflator of 125. What is its real GDP?

$$ \frac{500}{1.25} = 400 \text{ billion} $$

Question 1

Which of the following best describes the primary focus of macroeconomics?

Accepted Answer

The analysis of factors that determine the general level of prices, output, employment, income, and consumption in the economy as a whole.

Question 2

Suppose the Consumer Price Index (CPI) increased from 220 to 242 over one year. What is the annual inflation rate?

Accepted Answer

$$ \frac{242 - 220}{220} 	imes 100 = 10\% $$

Question 3

Which of the following is NOT a component of GDP using the expenditure approach?

Accepted Answer

Intermediate goods

Question 4

If the unemployment rate rises while the labor force participation rate remains constant, what does this indicate about the economy?

Accepted Answer

A higher proportion of the labor force is unable to find work.

Question 5

Which equation correctly represents the calculation of GDP using the income approach?

Accepted Answer

$$ 	ext{GDP} = 	ext{Wages} + 	ext{Rent} + 	ext{Interest} + 	ext{Profits} $$

Question 6

A country has a nominal GDP of $500 billion and a GDP deflator of 125. What is its real GDP?

Accepted Answer

$$ \frac{500}{1.25} = 400 	ext{ billion} $$

Question 7

Which of the following best explains the concept of opportunity cost?

Accepted Answer

The value of the next best alternative foregone when making a decision.

Question 8

If the aggregate demand curve shifts to the right, which of the following is most likely to occur in the short run?

Accepted Answer

The general price level will rise.

Question 9

Which of the following is a likely consequence of persistent inflation in an economy?

Accepted Answer

Reduced real value of money savings.

Question 10

Suppose the government increases spending without raising taxes. According to Keynesian theory, what is the expected short-run effect on aggregate demand?

Accepted Answer

Aggregate demand will increase.

Question 11

Which of the following best describes frictional unemployment?

Accepted Answer

Unemployment due to workers transitioning between jobs.

Question 12

If a country’s exports are $$200 billion and its imports are 150 $$billion, what is its net exports?

Accepted Answer

$$ 200 - 150 = 50 	ext{ billion} $$

Question 13

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

Accepted Answer

GDP does not account for the distribution of income among residents.

Question 14

The simple Keynesian consumption function is often written as $$ C = a + bY . $$What does the parameter $$ b $$ represent?

Accepted Answer

The marginal propensity to consume.

Question 15

Which of the following would most likely cause a leftward shift in the aggregate supply curve?

Accepted Answer

A rise in energy costs.

Question 16

If the labor force is 10 million and the number of unemployed is 1 million, what is the unemployment rate?

Accepted Answer

$$ \frac{1}{10} 	imes 100 = 10\% $$

Question 17

Which of the following is an example of structural unemployment?

Accepted Answer

A factory worker loses their job due to automation and cannot find a similar job.

Question 18

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

Accepted Answer

Increasing government spending during a recession.

Question 19

If the marginal propensity to consume (MPC) is 0.8, what is the value of the multiplier?

Accepted Answer

$$ \frac{1}{1 - 0.8} = 5 $$

Question 20

Which of the following best describes the role of fiscal policy in macroeconomics?

Accepted Answer

Regulating government spending and taxation to influence aggregate demand.

ECON 212 Principles of Macroeconomics – Syllabus and Study Guide

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