Q: A country has 150 million employed people and 10 million unemployed people actively seeking work. What is the unemployment rate?

$$\frac{10}{160} \times 100 = 6.25\%$$

Q: If the current cost of a market basket is $$600 and the base-year cost is 500$$, what is the Consumer Price Index (CPI)?

$$\frac{600}{500} \times 100 = 120$$

Question 1

Which of the following transactions would be included in the calculation of a country's GDP for the current year?

Accepted Answer

A family purchases a newly built home from a developer.

Question 2

Suppose the following data for a country in 2023: Consumption = $$500 billion, Investment = 200 $$billion, Government Purchases = $$300 billion, Exports = 100 $$billion, Imports = $150 billion. What is the country's GDP for 2023?

Accepted Answer

$950 billion

Question 3

If nominal GDP in 2022 is $$2,000 billion and real GDP (using 2015 as the base year) is 1$$,800 billion, what does this indicate about the economy between 2015 and 2022?

Accepted Answer

Prices have increased since 2015.

Question 4

Which of the following best explains why real GDP is considered a better measure of economic growth than nominal GDP?

Accepted Answer

Real GDP removes the effects of inflation, showing changes in actual output.

Question 5

A country has 150 million employed people and 10 million unemployed people actively seeking work. What is the unemployment rate?

Accepted Answer

$$\frac{10}{160} 	imes 100 = 6.25\%$$

Question 6

Which of the following is an example of structural unemployment?

Accepted Answer

A factory worker loses her job because the factory is replaced by robots.

Question 7

If the current cost of a market basket is $$600 and the base-year cost is 500$$, what is the Consumer Price Index (CPI)?

Accepted Answer

$$\frac{600}{500} 	imes 100 = 120$$

Question 8

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

Accepted Answer

GDP does not account for the value of household production.

Question 9

Suppose the nominal interest rate on a savings account is 7% and the inflation rate is 3%. What is the real interest rate?

Accepted Answer

$$7\% - 3\% = 4\%$$

Question 10

During which phase of the business cycle would you expect to see the highest unemployment rate and the lowest GDP?

Accepted Answer

Trough

Question 11

A government wants to combat a recession. According to Keynesian economics, which fiscal policy should it pursue?

Accepted Answer

Increase government spending and lower taxes.

Question 12

If the Federal Reserve wants to reduce inflation, which monetary policy action should it take?

Accepted Answer

Raise interest rates to discourage borrowing.

Question 13

Which of the following best describes the difference between the CPI and the GDP deflator?

Accepted Answer

The CPI measures the cost of a fixed basket of consumer goods, while the GDP deflator measures the price level of all domestically produced goods and services.

Question 14

A country has a labor force of 100 million and an adult population of 125 million. What is the labor force participation rate?

Accepted Answer

$$\frac{100}{125} 	imes 100 = 80\%$$

Question 15

Which of the following would NOT be counted in this year's GDP?

Accepted Answer

A used laptop sold on an online marketplace.

Question 16

If a country’s exports are $$300 billion and its imports are 350 $$billion, what is the value of net exports (NX)?

Accepted Answer

$$-50 	ext{ billion}$$

Question 17

A worker is laid off because consumer demand falls during a recession. What type of unemployment is this?

Accepted Answer

Cyclical unemployment

Question 18

Suppose the nominal value of a worker's salary is $50,000 and the price index is 125. What is the real value of the salary?

Accepted Answer

$$\frac{50,000 	imes 100}{125} = 40,000$$

Question 19

Which of the following is a likely consequence of a government-imposed minimum wage above the equilibrium wage?

Accepted Answer

Higher unemployment among low-skilled workers.

Question 20

A country’s real GDP increased from $$1 trillion to 1.1 $$trillion over one year, while its nominal GDP increased from $$1 trillion to 1.3 $$trillion. What can be inferred from this data?

Accepted Answer

Both output and prices increased.

Macroeconomics: Core Concepts and Measurements

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