$$\frac{210-200}{200} \times 100 = 5\%$$

$$\frac{8}{160} \times 100 = 5\%$$

$$\frac{500}{400} \times 100 = 125$$

Question 1

Which of the following is NOT included in the calculation of a country's GDP?

Accepted Answer

The value of used cars sold during the year

Question 2

Suppose the nominal GDP in 2022 is $20 trillion and the GDP deflator is 125. What is the real GDP for 2022?

Accepted Answer

$$\16$ trillion

Question 3

Which of the following best describes structural unemployment?

Accepted Answer

Unemployment caused by changes in technology or minimum wage laws

Question 4

If the Consumer Price Index (CPI) was 200 last year and 210 this year, what is the inflation rate?

Accepted Answer

$$\frac{210-200}{200} 	imes 100 = 5\%$$

Question 5

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

Accepted Answer

It does not include household production such as childcare by parents

Question 6

If the labor force is 160 million and the number of unemployed is 8 million, what is the unemployment rate?

Accepted Answer

$$\frac{8}{160} 	imes 100 = 5\%$$

Question 7

Which of the following would cause the supply of loanable funds to shift to the left?

Accepted Answer

An increase in government budget deficit

Question 8

If the nominal interest rate is 7% and the inflation rate is 3%, what is the real interest rate?

Accepted Answer

$$7\% - 3\% = 4\%$$

Question 9

Which of the following is true about the GDP deflator and the Consumer Price Index (CPI)?

Accepted Answer

The GDP deflator includes capital goods, while the CPI does not

Question 10

If a country’s real GDP per capita increases over time, what does this indicate?

Accepted Answer

The average standard of living is rising

Question 11

A country has a nominal GDP of $$500 billion and a real GDP of 400 $$billion. What is the GDP deflator?

Accepted Answer

$$\frac{500}{400} 	imes 100 = 125$$

Question 12

Which of the following is an example of frictional unemployment?

Accepted Answer

A recent college graduate searching for their first job

Question 13

If the annual growth rate of an economy is 2%, how many years will it take for the economy to double in size according to the Rule of 70?

Accepted Answer

$$\frac{70}{2} = 35$$ years

Question 14

Which of the following would be considered part of the underground economy?

Accepted Answer

A plumber paid in cash to avoid taxes

Question 15

Which of the following policies would most directly reduce human capital inequality?

Accepted Answer

Expanding access to quality education

Question 16

If the cost of a market basket in the base year is $$500 and in the current year is 600$$, what is the Consumer Price Index (CPI)?

Accepted Answer

$$\frac{600}{500} 	imes 100 = 120$$

Question 17

Which of the following is a likely consequence of hyperinflation?

Accepted Answer

Rapid erosion of the real value of local currency

Question 18

Which of the following is NOT a function of financial intermediaries?

Accepted Answer

Directly producing goods and services

Question 19

If government savings is negative, which of the following is true?

Accepted Answer

The government is running a budget deficit

Question 20

Which of the following would increase a nation’s potential GDP?

Accepted Answer

An increase in the labor force

Macroeconomics: GDP, Unemployment, Inflation, and Economic Growth

Study Guide - Practice Questions