Q: Given the following prices and quantities for a consumer basket: Food (60 units), Movies (40 units), Clothing (90 units). In 2021, prices are: Food = $$16$$, Movies = $$15$$, Clothing = $$26. If 2021 is $$the base year, what is the Consumer Price Index (CPI) for 2021?

$$\frac{(60 \times 16) + (40 \times 15) + (90 \times 26)}{(60 \times 16) + (40 \times 15) + (90 \times 26)} \times 100 = 100$$

Q: If the CPI in 2022 is $$108$$ and in 2021 is $$100$$, what is the annual inflation rate for 2022?

$$\frac{108 - 100}{100} \times 100 = 8\%$$

Q: In 2023, a country has a labor force of $$16,108$$ thousand, employment of $$14,946.2$$ thousand, and a working-age population of $$24,443.3$$ thousand. What is the labor force participation rate?

$$\frac{16,108}{24,443.3} \times 100 = 65.9\%$$

Q: Using the same data as above, what is the unemployment rate in 2023?

$$\frac{16,108 - 14,946.2}{16,108} \times 100 = 7.2\%$$

Q: If the working-age population increases by $$353.0$$ thousand, employment increases by $$364.2$$ thousand, and the labor force increases by $$469.5$$ thousand in 2024, what is the new labor force participation rate? (Original working-age population: $$24,443.3$$ thousand, labor force: $$16,108$$ thousand)

$$\frac{16,108 + 469.5}{24,443.3 + 353.0} \times 100 = 66.7\%$$

Q: If the labor force in 2024 is $$16,577.5$$ thousand and employment is $$15,310.4$$ thousand, what is the unemployment rate for 2024?

$$\frac{16,577.5 - 15,310.4}{16,577.5} \times 100 = 7.6\%$$

Question 1

Suppose an economy has the following data (in billions): Consumption = $$398$$, Investment = $$49$$, Government Purchases = $$134$$, Exports = $$179$$, Imports = $$170. $$Using the expenditure approach, what is the value of GDP?

Accepted Answer

$$398 + 49 + 134 + 179 - 170 = 590$$

Question 2

Given the following data for a country: GDP = $$733$$, Capital Consumption Allowance = $$79$$, Indirect Taxes (less subsidies) = $$76. $$What is the Net Domestic Product (NDP)?

Accepted Answer

$$733 - 79 = 654$$

Question 3

If the Net Domestic Product (NDP) is $$654$$ and Indirect Taxes (less subsidies) are $$76$$, what is the National Income (NI)?

Accepted Answer

$$654 - 76 = 578$$

Question 4

A country’s nominal GDP in 2022 is $$540$$ and the GDP deflator is $$105. $$What is the real GDP for 2022?

Accepted Answer

$$\frac{540}{1.05} = 514.29$$

Question 5

If the GDP deflator in 2020 is $$95$$ and nominal GDP is $$500$$, what is the real GDP for 2020?

Accepted Answer

$$\frac{500}{0.95} = 526.32$$

Question 6

Given the following prices and quantities for a consumer basket: Food (60 units), Movies (40 units), Clothing (90 units). In 2021, prices are: Food = $$16$$, Movies = $$15$$, Clothing = $$26. If 2021 is $$the base year, what is the Consumer Price Index (CPI) for 2021?

Accepted Answer

$$\frac{(60 	imes 16) + (40 	imes 15) + (90 	imes 26)}{(60 	imes 16) + (40 	imes 15) + (90 	imes 26)} 	imes 100 = 100$$

Question 7

If the CPI in 2022 is $$108$$ and in 2021 is $$100$$, what is the annual inflation rate for 2022?

Accepted Answer

$$\frac{108 - 100}{100} 	imes 100 = 8\%$$

Question 8

Suppose you borrow $$1000 at a $$nominal interest rate of $$5\%$$ when inflation is $$2\%. $$What is the real interest rate?

Accepted Answer

$$5\% - 2\% = 3\%$$

Question 9

If the real interest rate is $$3\%$$ and the expected inflation rate is $$4\%$$, what nominal interest rate should lenders charge to break even?

Accepted Answer

$$3\% + 4\% = 7\%$$

Question 10

If the actual inflation rate is higher than expected, who benefits: borrowers or lenders?

Accepted Answer

Borrowers benefit because they repay with money that is worth less than expected.

Question 11

In 2023, a country has a labor force of $$16,108$$ thousand, employment of $$14,946.2$$ thousand, and a working-age population of $$24,443.3$$ thousand. What is the labor force participation rate?

Accepted Answer

$$\frac{16,108}{24,443.3} 	imes 100 = 65.9\%$$

Question 12

Using the same data as above, what is the unemployment rate in 2023?

Accepted Answer

$$\frac{16,108 - 14,946.2}{16,108} 	imes 100 = 7.2\%$$

Question 13

If the working-age population increases by $$353.0$$ thousand, employment increases by $$364.2$$ thousand, and the labor force increases by $$469.5$$ thousand in 2024, what is the new labor force participation rate? (Original working-age population: $$24,443.3$$ thousand, labor force: $$16,108$$ thousand)

Accepted Answer

$$\frac{16,108 + 469.5}{24,443.3 + 353.0} 	imes 100 = 66.7\%$$

Question 14

If the labor force in 2024 is $$16,577.5$$ thousand and employment is $$15,310.4$$ thousand, what is the unemployment rate for 2024?

Accepted Answer

$$\frac{16,577.5 - 15,310.4}{16,577.5} 	imes 100 = 7.6\%$$

Question 15

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

Accepted Answer

Nominal GDP is measured using current prices, while real GDP is measured using constant base-year prices.

Question 16

If the price of food increases from $$15 to$$ $$17$$ per unit between 2022 and 2023, and the quantity consumed is $$60$$ units, what is the contribution to the CPI basket from food in 2023?

Accepted Answer

$$60 	imes 17 = 1,020$$

Question 17

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

Accepted Answer

Personal savings

Question 18

If a country’s GDP increases but its population grows faster, what happens to GDP per capita?

Accepted Answer

GDP per capita decreases

Macroeconomics Assignment Study Guide: GDP, Price Indices, Interest Rates, and Unemployment Measures

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