Q: Suppose the CPI in 2013 is $$100$$, in 2014 is $$150$$, and in 2015 is $$200. $$What is the inflation rate from 2014 to 2015?

$$\frac{200-150}{150} \times 100 = 33.3\%$$

Q: If the labor force in a town is $$4,000$$ and $$500$$ people are unemployed, what is the unemployment rate?

$$\frac{500}{4000} \times 100 = 12.5\%$$

Q: If the price of milk triples from $$1 to$$ $$3$$ and the quantity increases from $$150 to$$ $$232$$, what is the percentage change in total expenditure on milk?

$$\frac{3 \times 232 - 1 \times 150}{1 \times 150} \times 100 = 364\%$$

Question 1

Suppose Saudi Arabia and the United States each have 100 worker hours to produce oil or corn. According to the data, what is the opportunity cost for Saudi Arabia to produce 1 barrel of oil?

Accepted Answer

$$0.25$$ bushels of corn

Question 2

Based on the same data, who has the comparative advantage in producing corn?

Accepted Answer

United States

Question 3

If Saudi Arabia specializes in oil and the United States specializes in corn, and they trade 45 barrels of oil for 40 bushels of corn, what will Saudi Arabia's consumption of oil and corn be after trade?

Accepted Answer

Saudi Arabia: $$55$$ barrels oil, $$40$$ bushels corn

Question 4

Which of the following best describes the law of demand?

Accepted Answer

As the price of a good increases, the quantity demanded decreases, ceteris paribus.

Question 5

Given the supply and demand schedule for tickets, what is the equilibrium price and quantity?

Accepted Answer

$$12$$ and $$8,000$$ tickets

Question 6

If the price of a substitute good increases, what happens to the demand curve for the original good?

Accepted Answer

It shifts to the right.

Question 7

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

Accepted Answer

The value of used cars sold by individuals

Question 8

If nominal GDP in 2015 is $$2,250$$ and real GDP in 2015 (using 2013 as the base year) is $$1,500$$, what is the GDP deflator for 2015?

Accepted Answer

$$150$$

Question 9

Suppose the CPI in 2013 is $$100$$, in 2014 is $$150$$, and in 2015 is $$200. $$What is the inflation rate from 2014 to 2015?

Accepted Answer

$$\frac{200-150}{150} 	imes 100 = 33.3\%$$

Question 10

If the labor force in a town is $$4,000$$ and $$500$$ people are unemployed, what is the unemployment rate?

Accepted Answer

$$\frac{500}{4000} 	imes 100 = 12.5\%$$

Question 11

Which of the following is a limitation of GDP as a measure of well-being?

Accepted Answer

It does not account for the value of leisure.

Question 12

If the price of milk triples from $$1 to$$ $$3$$ and the quantity increases from $$150 to$$ $$232$$, what is the percentage change in total expenditure on milk?

Accepted Answer

$$\frac{3 	imes 232 - 1 	imes 150}{1 	imes 150} 	imes 100 = 364\%$$

Question 13

If the government increases its budget deficit, what is the likely effect in the market for loanable funds?

Accepted Answer

The supply of loanable funds shifts left, increasing the equilibrium interest rate.

Question 14

Which of the following is an example of frictional unemployment?

Accepted Answer

A recent college graduate searching for their first job.

Question 15

If real GDP per capita grows at a constant rate of $$2.25\%$$ per year, how many years will it take to double according to the Rule of 70?

Accepted Answer

$$\frac{70}{2.25} \approx 31.1$$ years

Question 16

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

Accepted Answer

It does not account for substitution bias.

Question 17

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

Accepted Answer

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

Question 18

If the price of a normal good increases, what happens to the quantity demanded and the demand curve?

Accepted Answer

Quantity demanded decreases; demand curve does not shift.

Question 19

Which of the following is an example of allocative efficiency?

Accepted Answer

Resources are distributed so that the last unit provides a marginal benefit equal to marginal cost.

Question 20

If the CPI in 1991 was $$136$$ and in 2016 was $$240$$, what is the value in 2016 dollars of a $$45,000$$ salary in 1991?

Accepted Answer

$$45,000 	imes \frac{240}{136} = \79$$,412$

Macroeconomics Exam Study Guide: Key Concepts, Tables, and Problem-Solving Practice

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