Q: Suppose the price of a basket of goods in year 1 is $100 and in year 2 is $110. What is the inflation rate between year 1 and year 2?

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

Q: If the unemployment rate is calculated as $ \frac{\text{unemployed}}{\text{unemployed} + \text{employed}} \times 100 $, what is the unemployment rate if there are 2 million unemployed and 8 million employed people?

$ \frac{2}{10} \times 100 = 20\% $

Question 1

Which of the following best describes the difference between GDP and GNP?

Accepted Answer

GDP measures the market value of all final goods and services produced within a country, while GNP measures the market value of all goods and services produced by a country's citizens both domestically and abroad.

Question 2

Suppose the price of a basket of goods in year 1 is $100 and in year 2 is $110. What is the inflation rate between year 1 and year 2?

Accepted Answer

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

Question 3

Which of the following is an example of a final good included in GDP?

Accepted Answer

A new car purchased by a household

Question 4

If a country experiences a trade deficit, which of the following is true?

Accepted Answer

Imports exceed exports

Question 5

According to the classical approach to macroeconomics, what is the role of government in the economy?

Accepted Answer

The government should have a limited role, as markets are self-correcting.

Question 6

Which of the following best describes the concept of diminishing marginal productivity of capital?

Accepted Answer

As more capital is added, the marginal product of capital declines.

Question 7

If the unemployment rate is calculated as $ \frac{	ext{unemployed}}{	ext{unemployed} + 	ext{employed}} 	imes 100 $, what is the unemployment rate if there are 2 million unemployed and 8 million employed people?

Accepted Answer

$ \frac{2}{10} 	imes 100 = 20\% $

Question 8

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

Accepted Answer

The value of a used car sold between two individuals

Question 9

Which of the following is a positive statement?

Accepted Answer

An increase in government spending will increase GDP.

Question 10

Suppose Canada exports $100 billion worth of goods and imports $120 billion. What is the value of net exports (NX) for Canada?

Accepted Answer

$ NX = 100 - 120 = -20 $ billion

Question 11

Which of the following would cause a shift in the labour supply curve?

Accepted Answer

An increase in the working-age population due to immigration

Question 12

Which of the following is a component of the expenditure approach to measuring GDP?

Accepted Answer

Net exports of goods and services

Question 13

If the marginal product of capital $ (MP_K) $ is given by $ MP_K = \frac{\Delta Y}{\Delta K} $, what does this represent?

Accepted Answer

The increase in output from a one unit increase in capital, holding other factors constant

Question 14

Which of the following is an example of a supply shock?

Accepted Answer

A major earthquake that destroys factories

Question 15

Which of the following is NOT a reason why GDP may not translate to better outcomes for the population?

Accepted Answer

GDP includes the value of leisure time

Question 16

Which of the following best describes the Keynesian approach to macroeconomics?

Accepted Answer

Wages and prices adjust slowly, so government intervention may be needed to address unemployment.

Question 17

If nominal GDP increases but real GDP remains constant, what does this imply?

Accepted Answer

Prices have increased but output has not changed.

Question 18

Which of the following is NOT a stage in constructing the Consumer Price Index (CPI)?

Accepted Answer

Measuring the unemployment rate

Question 19

Which of the following is a normative statement?

Accepted Answer

The government should increase spending to reduce unemployment.

Question 20

If a country’s GDP is $2 trillion, consumption is $1.1 trillion, investment is $0.5 trillion, and government spending is $0.3 trillion, what is the value of net exports (NX)?

Accepted Answer

$ NX = 2 - (1.1 + 0.5 + 0.3) = 0.1 $ trillion

Macroeconomics: Core Concepts, Measurement, and Models

Study Guide - Practice Questions

Study Guide - Flashcards