Q: If the labor force in a country is 200 million, and 10 million people are unemployed, what is the U-3 unemployment rate?

$$\frac{10}{200} \times 100 = 5\%$$

Q: If the labor force is 150 million, 10 million are unemployed, and 5 million are marginally attached workers, what is the U-5 unemployment rate?

$$\frac{10 + 5}{150 + 5} \times 100 = 9.68\%$$

Q: Suppose the price level in 2024 is $$120$$ and in 2025 it is $$126. $$What is the inflation rate between 2024 and 2025?

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

Q: A country’s real GDP in 2023 is $$\800$ billion and in 2024 is $$\$$840$$ billion. What is the real GDP growth rate from 2023 to 2024?

$$\frac{840 - 800}{800} \times 100 = 5\%$$

Question 1

Suppose a country's nominal GDP in 2025 is $$\1$$,200$$ billion and the GDP deflator for 2025 is 120$. What is the real GDP for 2025?

Accepted Answer

$$\1$$,000$ billion

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 200 million, and 10 million people are unemployed, what is the U-3 unemployment rate?

Accepted Answer

$$\frac{10}{200} 	imes 100 = 5\%$$

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 $$\500$ billion to $$\$$550$$ billion in one year. If the GDP deflator increased from $$100 to$$ $$110$$ during the same period, what is the real GDP growth rate?

Accepted Answer

0\%

Question 6

Which of the following best illustrates Adam Smith’s theory of the 'Invisible Hand'?

Accepted Answer

Individuals pursuing their own self-interest unintentionally benefit society as a whole.

Question 7

If the labor force is 150 million, 10 million are unemployed, and 5 million are marginally attached workers, what is the U-5 unemployment rate?

Accepted Answer

$$\frac{10 + 5}{150 + 5} 	imes 100 = 9.68\%$$

Question 8

Which of the following would be counted as planned investment in the expenditure approach to GDP?

Accepted Answer

A firm builds a new factory based on expected future demand.

Question 9

Suppose the price level in 2024 is $$120$$ and in 2025 it is $$126. $$What is the inflation rate between 2024 and 2025?

Accepted Answer

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

Question 10

Which of the following is NOT a component of GDP using the expenditure approach?

Accepted Answer

Transfer payments such as Social Security

Question 11

A country’s real GDP in 2023 is $$\800$ billion and in 2024 is $$\$$840$$ billion. What is the real GDP growth rate from 2023 to 2024?

Accepted Answer

$$\frac{840 - 800}{800} 	imes 100 = 5\%$$

Question 12

Which of the following would cause a shift in the demand curve for new cars to the right?

Accepted Answer

An increase in consumer incomes

Question 13

If actual investment is greater than planned investment in an economy, what is the most likely macroeconomic outcome?

Accepted Answer

Firms will accumulate unintended inventory, leading to a potential slowdown in production.

Question 14

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

Accepted Answer

A long-term increase in labor force participation over several decades

Question 15

Suppose the labor force is 100 million, 8 million are unemployed, 2 million are marginally attached, and 3 million are part-time for economic reasons. What is the U-6 unemployment rate?

Accepted Answer

$$\frac{8 + 2 + 3}{100 + 2} 	imes 100 = 12.75\%$$

Question 16

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

Accepted Answer

Government spending on public infrastructure

Question 17

If the nominal GDP of a country increases by 8\% and the GDP deflator increases by 5\%, what is the real GDP growth rate?

Accepted Answer

3\%

Question 18

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

Accepted Answer

The value of used cars sold by individuals

Question 19

A country’s population is 300 million. Of these, 180 million are employed, 20 million are unemployed, and 40 million are not in the labor force. What is the labor force participation rate?

Accepted Answer

$$\frac{180 + 20}{300} 	imes 100 = 66.67\%$$

Question 20

Which of the following scenarios best illustrates the use of the exponential growth model in macroeconomics?

Accepted Answer

A country’s GDP grows at a constant percentage rate each year, such that $$GDP_t = $$GDP_0$$ 	imes (1 + g)^t$$

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

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