Q: Which of the following is the correct formula for calculating the unemployment rate?

$$\text{Unemployment Rate} = \frac{\text{Number of Unemployed}}{\text{Labor Force}} \times 100$$

Q: A country’s real GDP increased from $$\1$$,000$$ billion to $$\$$1,050$$ billion, while the GDP deflator rose from $$100 to$$ $$105. $$What happened to nominal GDP?

$$\text{Nominal GDP} = \text{Real GDP} \times \frac{\text{GDP Deflator}}{100}$$, so nominal GDP increased from $$\1$$,000$$ billion to $$\$$1,102.5$$ billion.

Question 1

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 2

Suppose the government implements a contractionary fiscal policy. Which of the following actions is most consistent with this policy, and what is its primary purpose?

Accepted Answer

Increasing taxes to reduce aggregate demand and control inflation.

Question 3

Which of the following is NOT included in the calculation of GDP using the expenditure approach?

Accepted Answer

Purchases of used cars by consumers.

Question 4

If the central bank wants to implement an expansionary monetary policy, which of the following actions would it most likely take?

Accepted Answer

Lowering the reserve requirement to increase the money supply.

Question 5

Which of the following best illustrates the concept of opportunity cost?

Accepted Answer

Choosing to attend college means giving up full-time work income.

Question 6

A supply curve shifts to the right. Which of the following could explain this shift?

Accepted Answer

A technological advancement reduces production costs.

Question 7

Which of the following is the correct formula for calculating the unemployment rate?

Accepted Answer

$$	ext{Unemployment Rate} = \frac{	ext{Number of Unemployed}}{	ext{Labor Force}} 	imes 100$$

Question 8

Which of the following is an example of human capital?

Accepted Answer

A worker's education and job training.

Question 9

If the price of coffee increases and, as a result, the demand for tea increases, what is the relationship between coffee and tea?

Accepted Answer

They are substitute goods.

Question 10

A country’s real GDP increased from $$\1$$,000$$ billion to $$\$$1,050$$ billion, while the GDP deflator rose from $$100 to$$ $$105. $$What happened to nominal GDP?

Accepted Answer

$$	ext{Nominal GDP} = 	ext{Real GDP} 	imes \frac{	ext{GDP Deflator}}{100}$$, so nominal GDP increased from $$\1$$,000$$ billion to $$\$$1,102.5$$ billion.

Question 11

Which of the following best describes the 'catch-up effect' in economic growth?

Accepted Answer

Poorer countries tend to grow faster than richer ones when they adopt existing technologies.

Question 12

If a price ceiling is set below the equilibrium price, what is the likely market outcome?

Accepted Answer

A shortage, because quantity demanded exceeds quantity supplied.

Question 13

Which of the following is a function of money?

Accepted Answer

Medium of exchange

Question 14

Suppose the mean income in a country is $$\50$$,000$$, the median is $$\$$40,000$$, and the mode is $$\35$$,000$. What does this suggest about the income distribution?

Accepted Answer

The distribution is right-skewed (positively skewed).

Question 15

Which of the following best describes the difference between real and nominal values?

Accepted Answer

Real values are adjusted for inflation; nominal values are not.

Question 16

If the Federal Reserve sells government securities in the open market, what is the expected effect on the federal funds rate and the money supply?

Accepted Answer

The federal funds rate increases and the money supply decreases.

Question 17

Which of the following is an example of a positive correlation?

Accepted Answer

As education level increases, average income also increases.

Question 18

A country is experiencing a recession. Which phase of the business cycle is it most likely in?

Accepted Answer

Contraction

Question 19

Which of the following best describes the concept of diminishing marginal benefit?

Accepted Answer

As more of a good is consumed, the additional satisfaction from each extra unit decreases.

Question 20

Which of the following is an example of empirical analysis in economics?

Accepted Answer

Using real-world data to test the relationship between unemployment and inflation.

Macroeconomics Final Exam Study Guide: Key Concepts and Applications

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