Q: Suppose a country's nominal GDP in 2024 is $$\1$$,200$$ billion and its real GDP (in 2020 dollars) is $$\$$1,000$$ billion. What is the value of the GDP deflator for 2024?

$$\frac{1,200}{1,000} \times 100 = 120$$

Q: If the labor force in a country is 150 million and 10 million people are unemployed, what is the U-3 unemployment rate?

$$\frac{10}{150} \times 100 = 6.67\%$$

Q: Suppose the price level in 2023 is 120 and in 2024 it is 132. What is the inflation rate between 2023 and 2024?

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

Question 1

Suppose a country's nominal GDP in 2024 is $$\1$$,200$$ billion and its real GDP (in 2020 dollars) is $$\$$1,000$$ billion. What is the value of the GDP deflator for 2024?

Accepted Answer

$$\frac{1,200}{1,000} 	imes 100 = 120$$

Question 2

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

Accepted Answer

GDP measures the value of all goods and services produced within a country's borders, while GNP measures the value of all goods and services produced by a country's citizens regardless of location.

Question 3

If the labor force in a country is 150 million and 10 million people are unemployed, what is the U-3 unemployment rate?

Accepted Answer

$$\frac{10}{150} 	imes 100 = 6.67\%$$

Question 4

Which of the following is an example of a leakage in the circular flow model?

Accepted Answer

Households saving part of their income in banks.

Question 5

A country’s nominal GDP grew from $$\2$$,000$$ billion to $$\$$2,200$$ billion in one year. The GDP deflator increased from 100 to 110. What is the real GDP growth rate?

Accepted Answer

$$\frac{2,200/110}{2,000/100} - 1 = \frac{20}{20} - 1 = 0\%$$

Question 6

Which of the following would NOT be included in the calculation of a country’s GDP using the expenditure approach?

Accepted Answer

The purchase of used cars by consumers.

Question 7

If the labor force participation rate increases while the working-age population remains constant, what must be true?

Accepted Answer

The number of people in the labor force has increased.

Question 8

Which of the following best illustrates Adam Smith’s theory of the 'invisible hand'?

Accepted Answer

A baker produces bread to earn a profit, but in doing so, provides food for the community.

Question 9

Suppose the price level in 2023 is 120 and in 2024 it is 132. What is the inflation rate between 2023 and 2024?

Accepted Answer

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

Question 10

Which of the following is a secular trend in labor market data?

Accepted Answer

A steady increase in female labor force participation over several decades.

Question 11

If actual investment is less than planned investment in the economy, what is likely to happen to inventories?

Accepted Answer

Inventories will decrease.

Question 12

Which of the following would cause a rightward shift in the demand curve for electric vehicles?

Accepted Answer

A significant increase in gasoline prices.

Question 13

A country’s real GDP grew from $$\500$ billion to $$\$$525$$ billion over one year. What is the real GDP growth rate?

Accepted Answer

$$\frac{525 - 500}{500} 	imes 100 = 5\%$$

Question 14

Which of the following is an injection in the circular flow model?

Accepted Answer

Government spending on public projects.

Question 15

If the unemployment rate (U-3) is 5%, the labor force is 100 million, and the number of discouraged workers is 2 million, what is the U-5 unemployment rate?

Accepted Answer

$$\frac{5 + 2}{100} 	imes 100 = 7\%$$

Question 16

Which of the following best describes the expenditure approach to calculating GDP?

Accepted Answer

Summing consumption, investment, government spending, and net exports.

Question 17

If a country’s nominal GDP grows by 8% and the GDP deflator increases by 5%, what is the approximate real GDP growth rate?

Accepted Answer

$$8\% - 5\% = 3\%$$

Question 18

Which of the following is most likely to cause a leftward shift in the supply curve for wheat?

Accepted Answer

A severe drought affecting major wheat-producing regions.

Question 19

Suppose the population of a country is 200 million, the working-age population is 150 million, and the labor force is 100 million. What is the labor force participation rate?

Accepted Answer

$$\frac{100}{150} 	imes 100 = 66.67\%$$

Question 20

Which of the following best describes a cyclical trend in labor market data?

Accepted Answer

A rise in unemployment during an economic recession.

Macroeconomics Exam 1 Study Guide: Growth Models, GDP, Labor Markets, and Core Concepts

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