Question 1

Suppose the unemployment rate in a country is 8%, the labor force is 150 million, and the number of unemployed people is 12 million. What is the number of employed people?

Accepted Answer

$$138$$ million

Question 2

Which of the following would NOT be counted as unemployed in official statistics?

Accepted Answer

A person who is retired and not looking for work

Question 3

If the real interest rate is $$5\%$$ and the inflation rate is $$2\%$$, what is the nominal interest rate?

Accepted Answer

$$7\%$$

Question 4

Which of the following would cause the aggregate demand curve to shift to the right?

Accepted Answer

An increase in government purchases

Question 5

If the price level increases, what happens to the real value of money?

Accepted Answer

It decreases

Question 6

Suppose the marginal product of labor for the second hour of work is calculated using the following table:

$$\begin{array}{cc}
	ext{Hours of work} & 	ext{Output (units)} \
1 & 9 \
2 & 16 \
3 & 20 \
4 & 24 \
5 & 25 \
\end{array}$$

What is the marginal product of the second hour?

Accepted Answer

$$7$$ units

Question 7

Which of the following best describes cyclical unemployment?

Accepted Answer

Unemployment caused by downturns in the business cycle

Question 8

If the money wage rate increases and the price level remains constant, what happens to the real wage rate?

Accepted Answer

It increases

Question 9

Which of the following would cause the long-run aggregate supply (LRAS) curve to shift to the right?

Accepted Answer

An increase in the labor force

Question 10

If the unemployment rate is below the natural rate of unemployment, which of the following is true?

Accepted Answer

Real GDP is greater than potential GDP

Question 11

Suppose the government increases its purchases of goods and services. In the short run, what is the likely effect on real GDP and the price level?

Accepted Answer

Both real GDP and the price level will increase

Question 12

Which of the following is an example of frictional unemployment?

Accepted Answer

A recent college graduate searching for their first job

Question 13

If the actual unemployment rate equals the natural rate of unemployment, which of the following is true?

Accepted Answer

There is no cyclical unemployment

Question 14

Which of the following best explains why the aggregate demand curve is downward sloping?

Accepted Answer

As the price level rises, the real value of money falls, reducing consumption

Question 15

If the money wage rate rises, what happens to the short-run aggregate supply (SAS) curve?

Accepted Answer

It shifts leftward

Question 16

Suppose the price level in 2010 is 120, and in the reference base period it was 100. What is the inflation rate?

Accepted Answer

$$20\%$$

Question 17

Which of the following is most likely to increase potential GDP in the long run?

Accepted Answer

An increase in labor productivity

Question 18

If the actual price level is higher than the expected price level, what is the likely effect on short-run aggregate supply?

Accepted Answer

Firms will increase production, shifting SAS rightward

Question 19

Which of the following is an example of structural unemployment?

Accepted Answer

A worker whose job is replaced by automation and who lacks the skills for new jobs

Question 20

If the saving supply curve shifts rightward, what happens to equilibrium interest rates and investment?

Accepted Answer

Interest rates fall and investment increases

Macroeconomics: Key Concepts, Models, and Applications – Study Guide

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