Q: If nominal GDP in 2022 is $$\20$ trillion and real GDP in 2022 (using 2015 as the base year) is $$\$$18$$ trillion, what is the GDP deflator for 2022?

$$GDP\ deflator = \frac{Nominal\ GDP}{Real\ GDP} \times 100 = \frac{20}{18} \times 100 = 111.1$$

Question 1

Which of the following best describes the concept of scarcity in economics?

Accepted Answer

Scarcity means that resources are limited and cannot satisfy all human wants and needs.

Question 2

Suppose the price of coffee increases. According to the law of demand, what is most likely to happen to the quantity demanded of coffee, ceteris paribus?

Accepted Answer

The quantity demanded of coffee will decrease.

Question 3

Which of the following is an example of a 'change in demand' rather than a 'change in quantity demanded'?

Accepted Answer

A new study shows health benefits of coffee, increasing consumer preference for coffee.

Question 4

Which formula correctly calculates GDP using the expenditure approach?

Accepted Answer

$$GDP = C + I + G + NX$$

Question 5

If nominal GDP in 2022 is $$\20$ trillion and real GDP in 2022 (using 2015 as the base year) is $$\$$18$$ trillion, what is the GDP deflator for 2022?

Accepted Answer

$$GDP\ deflator = \frac{Nominal\ GDP}{Real\ GDP} 	imes 100 = \frac{20}{18} 	imes 100 = 111.1$$

Question 6

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

Accepted Answer

The value of a used car sold by a private individual.

Question 7

Which of the following is a shortcoming of GDP as a measure of well-being?

Accepted Answer

GDP does not account for leisure time.

Question 8

A country has the following data for a given year: Consumption = $$\500$ billion, Investment = $$\$$200$$ billion, Government Purchases = $$\150$ billion, Net Exports = $$-\$$50$$ billion. What is the country's GDP?

Accepted Answer

$$GDP = 500 + 200 + 150 - 50 = \800$ billion

Question 9

Which of the following individuals would be considered 'unemployed' according to the Current Population Survey?

Accepted Answer

A person who is actively seeking work but has not found a job.

Question 10

If the labor force in a country is 150 million and the number of employed people is 140 million, what is the unemployment rate?

Accepted Answer

$$Unemployment\ Rate = \frac{Labor\ Force - Employed}{Labor\ Force} 	imes 100 = \frac{150 - 140}{150} 	imes 100 = 6.67\%$$

Question 11

Which of the following is an example of structural unemployment?

Accepted Answer

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

Question 12

Which of the following would cause the official unemployment rate to overstate the true level of joblessness in the economy?

Accepted Answer

Individuals who falsely claim to be actively seeking work.

Question 13

Which formula is used to calculate the Consumer Price Index (CPI)?

Accepted Answer

$$CPI = \frac{Cost\ of\ basket\ in\ current\ year}{Cost\ of\ basket\ in\ base\ year} 	imes 100$$

Question 14

If the CPI was 120 last year and 126 this year, what is the inflation rate?

Accepted Answer

$$Inflation\ Rate = \frac{126 - 120}{120} 	imes 100 = 5\%$$

Question 15

Which of the following is NOT a bias that affects the accuracy of the Consumer Price Index (CPI)?

Accepted Answer

Income bias

Question 16

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

Accepted Answer

Real interest rate is adjusted for inflation, while nominal interest rate is not.

Question 17

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

Accepted Answer

$$Real\ Interest\ Rate = Nominal\ Interest\ Rate - Inflation\ Rate = 8\% - 3\% = 5\%$$

Question 18

Which of the following is a reason why GDP may not accurately reflect the true level of production in an economy?

Accepted Answer

GDP does not include transactions that take place in the underground economy.

Question 19

Which of the following is a key difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics focuses on individual households and firms, while macroeconomics studies the economy as a whole.

Macroeconomics Study Guide: Foundations, Demand & Supply, GDP, Unemployment, and Inflation

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