Q: If the unemployment rate is 6%, the labor force is 200 million, and the number of unemployed people is 12 million, what is the labor force participation rate if the working-age population is 250 million?

$$ \frac{200}{250} \times 100 = 80\% $$

Q: If the CPI in 2021 is 110 and in 2022 is 121, what is the inflation rate between these years?

$$ \frac{121 - 110}{110} \times 100 = 10\% $$

Q: A country’s real GDP per capita increases from $$ \30$$,000 $$ to $$ \$$31,200 in $$one year. What is the growth rate of real GDP per capita?

$$ \frac{31,200 - 30,000}{30,000} \times 100 = 4\% $$

Question 1

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

Accepted Answer

Nominal GDP measures the value of final goods and services at current prices, while real GDP measures them at constant prices.

Question 2

Suppose the GDP deflator in 2022 is 120 and nominal GDP is $$ \600$$ 	ext{ billion} $. What is the real GDP for 2022?

Accepted Answer

$$ \500$$ 	ext{ billion} $

Question 3

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

Accepted Answer

Transfer payments such as Social Security

Question 4

If the unemployment rate is 6%, the labor force is 200 million, and the number of unemployed people is 12 million, what is the labor force participation rate if the working-age population is 250 million?

Accepted Answer

$$ \frac{200}{250} 	imes 100 = 80\% $$

Question 5

Which type of unemployment is most likely to increase during a recession?

Accepted Answer

Cyclical unemployment

Question 6

If the CPI in 2021 is 110 and in 2022 is 121, what is the inflation rate between these years?

Accepted Answer

$$ \frac{121 - 110}{110} 	imes 100 = 10\% $$

Question 7

Which of the following best explains the concept of 'menu costs' in the context of inflation?

Accepted Answer

The cost to firms of changing prices in catalogs, menus, and systems due to inflation

Question 8

A country’s real GDP per capita increases from $$ \30$$,000 $$ to $$ \$$31,200  in $$one year. What is the growth rate of real GDP per capita?

Accepted Answer

$$ \frac{31,200 - 30,000}{30,000} 	imes 100 = 4\% $$

Question 9

Which of the following is an example of structural unemployment?

Accepted Answer

A coal miner loses their job because the country shifts to renewable energy sources.

Question 10

If the nominal interest rate is 8% and the inflation rate is 3%, what is the real interest rate?

Accepted Answer

$$ 8\% - 3\% = 5\% $$

Question 11

Which of the following would be considered an intermediate good in the calculation of GDP?

Accepted Answer

Steel purchased by an automaker to produce cars

Question 12

Which of the following policies would most likely increase the long-run growth rate of an economy?

Accepted Answer

Investing in education and human capital

Question 13

If the efficiency wage theory is correct, what is the likely effect of firms paying wages above the equilibrium level?

Accepted Answer

It will increase worker productivity but may also increase unemployment.

Question 14

Which of the following best describes the crowding out effect?

Accepted Answer

Government borrowing increases interest rates, reducing private investment.

Question 15

Suppose the natural rate of unemployment is 4%, frictional unemployment is 2%, and structural unemployment is 2%. What is the cyclical unemployment rate if the actual unemployment rate is 7%?

Accepted Answer

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

Question 16

Which of the following is a problem with using the unemployment rate as a measure of labor market health?

Accepted Answer

It does not account for underemployed or discouraged workers.

Question 17

If a country’s population grows faster than its real GDP, what will happen to its real GDP per capita?

Accepted Answer

It will decrease.

Question 18

Which of the following is most likely to shift the demand curve for loanable funds to the right?

Accepted Answer

An increase in business confidence

Question 19

If the price level increases by 5% and nominal wages increase by 3%, what happens to real wages?

Accepted Answer

Real wages decrease by approximately 2%.

Question 20

Which of the following best describes the role of banks and financial intermediaries in the loanable funds market?

Accepted Answer

They match savers with borrowers, facilitating investment and economic growth.

Macroeconomics Core Concepts: Business Cycles, GDP, Unemployment, Inflation, and Economic Growth

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