Q: Suppose a country produces only two goods: cars and computers. In 2020, it produced 100 cars at $20,000 each and 200 computers at $1,000 each. In 2021, it produced 110 cars at $22,000 each and 220 computers at $1,100 each. Using 2020 as the base year, what is the real GDP for 2021?

$ (110 \times 20,000) + (220 \times 1,000) = \$2,200,000 + \$220,000 = \$2,420,000 $

Q: If nominal GDP in 2022 is $5 trillion and the GDP deflator is 125, what is the real GDP for 2022?

$ \text{Real GDP} = \frac{\$5\text{ trillion}}{1.25} = \$4\text{ trillion} $

Q: A country has a population of 200 million, of which 120 million are in the labor force. If 6 million are unemployed, what is the unemployment rate?

$ \frac{6}{120} \times 100 = 5\% $

Q: If the Consumer Price Index (CPI) was 200 in 2020 and 220 in 2021, what was the inflation rate between 2020 and 2021?

$ \frac{220 - 200}{200} \times 100 = 10\% $

Q: If the labor force is 50 million and the number of employed people is 47 million, what is the unemployment rate?

$ \frac{3}{50} \times 100 = 6\% $

Question 1

Suppose a country produces only two goods: cars and computers. In 2020, it produced 100 cars at $20,000 each and 200 computers at $1,000 each. In 2021, it produced 110 cars at $22,000 each and 220 computers at $1,100 each. Using 2020 as the base year, what is the real GDP for 2021?

Accepted Answer

$ (110 	imes 20,000) + (220 	imes 1,000) = \$2,200,000 + \$220,000 = \$2,420,000 $

Question 2

Which of the following best describes structural unemployment?

Accepted Answer

Unemployment that results from a mismatch between the skills of workers and the requirements of available jobs.

Question 3

If nominal GDP in 2022 is $5 trillion and the GDP deflator is 125, what is the real GDP for 2022?

Accepted Answer

$ 	ext{Real GDP} = \frac{\$5	ext{ trillion}}{1.25} = \$4	ext{ trillion} $

Question 4

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

Accepted Answer

The value of intermediate goods used in production

Question 5

A country has a population of 200 million, of which 120 million are in the labor force. If 6 million are unemployed, what is the unemployment rate?

Accepted Answer

$ \frac{6}{120} 	imes 100 = 5\% $

Question 6

Which of the following would cause the labor force participation rate to decrease?

Accepted Answer

An increase in the number of discouraged workers

Question 7

If the Consumer Price Index (CPI) was 200 in 2020 and 220 in 2021, what was the inflation rate between 2020 and 2021?

Accepted Answer

$ \frac{220 - 200}{200} 	imes 100 = 10\% $

Question 8

Which of the following best illustrates the concept of 'menu costs'?

Accepted Answer

The cost to a restaurant of printing new menus when prices change due to inflation.

Question 9

Suppose the nominal interest rate on a savings account is 5% and the inflation rate is 3%. What is the real interest rate?

Accepted Answer

$ 5\% - 3\% = 2\% $

Question 10

Which of the following is an example of frictional unemployment?

Accepted Answer

A recent college graduate is searching for her first job.

Question 11

If the labor force is 50 million and the number of employed people is 47 million, what is the unemployment rate?

Accepted Answer

$ \frac{3}{50} 	imes 100 = 6\% $

Question 12

Which of the following would be considered an intermediate good?

Accepted Answer

Steel purchased by an automaker to produce cars

Question 13

Which of the following is a transfer payment?

Accepted Answer

A government payment to a retired person through Social Security

Question 14

If the per capita GDP of a country is $40,000 and the population grows by 2% while real GDP grows by 4%, what is the new per capita GDP growth rate?

Accepted Answer

$ 4\% - 2\% = 2\% $

Question 15

Which of the following best describes the 'crowding out' effect?

Accepted Answer

Government borrowing increases interest rates, reducing private investment.

Question 16

If the CPI in 2010 is 150 and in 2020 is 180, what is the percentage increase in the price level over this period?

Accepted Answer

$ \frac{180 - 150}{150} 	imes 100 = 20\% $

Question 17

Which of the following is most likely to increase long-run economic growth?

Accepted Answer

An increase in investment in human capital

Question 18

Suppose the natural rate of unemployment is 5%. During a recession, the actual unemployment rate rises to 9%. What is the cyclical unemployment rate?

Accepted Answer

$ 9\% - 5\% = 4\% $

Question 19

Which of the following would be counted as part of a country's GDP?

Accepted Answer

A new house built and sold during the year

Question 20

If the nominal wage increases by 3% and the inflation rate is 2%, what is the percentage change in the real wage?

Accepted Answer

$ 3\% - 2\% = 1\% $

Macroeconomics Core Concepts and Problem Solving: GDP, Unemployment, Inflation, and Economic Growth

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