Q: Suppose the GDP of a country increases from $$\1$$,000$$ billion to $$\$$1,050$$ billion in one year. What is the annual growth rate of GDP?

$$\frac{1,050 - 1,000}{1,000} \times 100 = 5\%$$

Q: Suppose the Consumer Price Index (CPI) was 120 last year and is 126 this year. What is the inflation rate for this year?

$$\frac{126 - 120}{120} \times 100 = 5\%$$

Question 1

Which of the following best describes the primary focus of macroeconomics?

Accepted Answer

The analysis of the overall performance and structure of an entire economy.

Question 2

Suppose the GDP of a country increases from $$\1$$,000$$ billion to $$\$$1,050$$ billion in one year. What is the annual growth rate of GDP?

Accepted Answer

$$\frac{1,050 - 1,000}{1,000} 	imes 100 = 5\%$$

Question 3

Which of the following is NOT included in the calculation of a country’s Gross Domestic Product (GDP)?

Accepted Answer

The purchase of stocks and bonds by individuals.

Question 4

If the unemployment rate is calculated as $$\frac{	ext{Number of Unemployed}}{	ext{Labor Force}} 	imes 100$$, which of the following scenarios would cause the unemployment rate to increase?

Accepted Answer

More people lose their jobs and actively seek new employment.

Question 5

Which of the following best illustrates the concept of opportunity cost?

Accepted Answer

A government spends money on building roads instead of funding education.

Question 6

Suppose the Consumer Price Index (CPI) was 120 last year and is 126 this year. What is the inflation rate for this year?

Accepted Answer

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

Question 7

Which of the following is an example of fiscal policy?

Accepted Answer

The government increases spending on infrastructure projects.

Question 8

If the aggregate demand curve shifts to the right, which of the following is the most likely result in the short run?

Accepted Answer

An increase in the price level and an increase in real GDP.

Question 9

Which of the following equations correctly represents the expenditure approach to calculating GDP?

Accepted Answer

$$GDP = C + I + G + (X - M)$$

Question 10

A country’s real GDP per capita increases, but its population grows faster than its real GDP. What happens to the standard of living?

Accepted Answer

The standard of living decreases.

Question 11

Suppose the reserve requirement is 10%. If a bank receives a new deposit of $$\1$$,000$, what is the maximum amount of new loans it can make?

Accepted Answer

$$\900$

Question 12

Which of the following best describes structural unemployment?

Accepted Answer

Unemployment due to changes in the structure of the economy, such as technological advances.

Question 13

If the marginal propensity to consume (MPC) is $$0.8$$, what is the value of the spending multiplier?

Accepted Answer

$$\frac{1}{1 - 0.8} = 5$$

Question 14

Which of the following would cause a movement along the aggregate demand curve, rather than a shift of the curve?

Accepted Answer

A change in the price level.

Question 15

If the government increases taxes and decreases spending at the same time, what is the likely effect on aggregate demand?

Accepted Answer

Aggregate demand will decrease.

Question 16

Suppose the money supply increases by $$\500$ million and the money multiplier is 4$. What is the total potential increase in the money supply?

Accepted Answer

$$\2$$,000$ million

Question 17

Which of the following is an example of monetary policy?

Accepted Answer

The central bank lowers the reserve requirement.

Question 18

If the velocity of money ($$V) is$$ $$5$$, the money supply ($$M) is$$ $$\2$ trillion, and nominal GDP (P$$ 	imes Y$$) is $$\$$10$$ trillion, which equation correctly represents the quantity theory of money?

Accepted Answer

$$M 	imes V = P 	imes Y$$

Question 19

During a recession, which of the following policies would most likely be used to stimulate economic growth?

Accepted Answer

Decrease taxes.

Question 20

If a country’s exports ($$X) $$are $$\500$ billion and its imports (M$) are $$\$$600$$ billion, what is the value of net exports ($$NX$$)?

Accepted Answer

$$NX = X - M = \500$$ - \$$600 = -\100$ billion

ECON 2105E Macroeconomics: Course Schedule and Assessment Structure

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