Q: Suppose in 2022, the nominal GDP of a country is $5,000$ and the real GDP is $4,500$. What is the GDP deflator for 2022?

$\frac{5000}{4500} \times 100 = 111.11$

Q: If the CPI in 2020 is $120$ and the CPI in 2021 is $132$, what is the inflation rate between 2020 and 2021?

$\frac{132 - 120}{120} \times 100 = 10\%$

Q: A country has 80 million employed workers, 10 million unemployed workers, and a working-age population of 120 million. What is the unemployment rate?

$\frac{10}{80+10} \times 100 = 11.11\%$

Q: If real GDP grows from $2,000$ to $2,200$ over one year, what is the economic growth rate?

$\frac{2200 - 2000}{2000} \times 100 = 10\%$

Question 1

Which of the following best describes the difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics focuses on the behavior of individual consumers and firms, while macroeconomics analyzes the economy as a whole, including aggregate measures like GDP and unemployment.

Question 2

Suppose in 2022, the nominal GDP of a country is $5,000$ and the real GDP is $4,500$. What is the GDP deflator for 2022?

Accepted Answer

$\frac{5000}{4500} 	imes 100 = 111.11$

Question 3

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

Accepted Answer

The value of used cars sold by individuals

Question 4

If the CPI in 2020 is $120$ and the CPI in 2021 is $132$, what is the inflation rate between 2020 and 2021?

Accepted Answer

$\frac{132 - 120}{120} 	imes 100 = 10\%$

Question 5

A country has 80 million employed workers, 10 million unemployed workers, and a working-age population of 120 million. What is the unemployment rate?

Accepted Answer

$\frac{10}{80+10} 	imes 100 = 11.11\%$

Question 6

Which of the following is an example of structural unemployment?

Accepted Answer

A factory worker loses their job because their skills are no longer needed due to automation.

Question 7

If the nominal interest rate is $6\%$ and the inflation rate is $2\%$, what is the real interest rate?

Accepted Answer

$6\% - 2\% = 4\%$

Question 8

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

Accepted Answer

An increase in discouraged workers who stop looking for jobs

Question 9

If real GDP grows from $2,000$ to $2,200$ over one year, what is the economic growth rate?

Accepted Answer

$\frac{2200 - 2000}{2000} 	imes 100 = 10\%$

Question 10

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

Accepted Answer

GDP does not account for environmental degradation or unpaid household work.

Question 11

If the government increases its borrowing, what is the likely effect on the market for loanable funds?

Accepted Answer

The real interest rate increases, leading to crowding out of private investment.

Question 12

Which of the following best describes the Rule of 70?

Accepted Answer

It estimates the number of years required for a variable to double, calculated as $\frac{70}{	ext{growth rate}}$.

Question 13

Which of the following is a bias in the Consumer Price Index (CPI)?

Accepted Answer

Substitution bias, where consumers switch to cheaper alternatives not reflected in the fixed basket.

Question 14

A worker who has stopped looking for a job because they believe none are available is classified as:

Accepted Answer

A discouraged worker

Question 15

If the CPI in 2010 is $100$ and the CPI in 2020 is $150$, and a salary in 2010 was $40,000$, what is the equivalent salary in 2020 dollars?

Accepted Answer

$40,000 	imes \frac{150}{100} = $60,000$

Question 16

Which of the following is NOT a determinant of labor productivity?

Accepted Answer

Increase in minimum wage

Question 17

During a recession, which of the following typically occurs?

Accepted Answer

GDP decreases, unemployment rate increases, inflation rate decreases.

Question 18

Which of the following is a function of financial intermediaries in the financial system?

Accepted Answer

Risk sharing, liquidity provision, and information services

Question 19

If exports are $500$ and imports are $600$, what are net exports?

Accepted Answer

$500 - 600 = -100$

Macroeconomics Exam 1 Study Guide: GDP, Unemployment, Inflation, and Economic Growth

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