Question 1

Suppose a country can produce either 100 units of food or 200 units of clothing with all its resources. What is the opportunity cost of producing one unit of food in terms of clothing?

Accepted Answer

$$2$$ units of clothing$

Question 2

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

Accepted Answer

Nominal GDP is measured using current prices, while real GDP is measured using constant base-year prices.

Question 3

If the Consumer Price Index (CPI) was $$120 in 2020 $$and $$132 in 2021$$, what was the inflation rate between 2020 and 2021?

Accepted Answer

$$10\%$$

Question 4

A country has the following GDP components (in billions): Consumption = $$500$$, Investment = $$200$$, Government Spending = $$150$$, Exports = $$100$$, Imports = $$120. $$What is the country's GDP?

Accepted Answer

$$830$$

Question 5

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

Accepted Answer

The value of used cars sold in the current year

Question 6

If the minimum wage is set above the equilibrium wage in a labor market, what is the likely result?

Accepted Answer

A surplus of labor, or unemployment

Question 7

Suppose the price of coffee increases. What is the likely effect on the demand for tea, assuming tea is a substitute for coffee?

Accepted Answer

The demand for tea will increase

Question 8

Which of the following best illustrates the concept of comparative advantage?

Accepted Answer

A country produces a good at a lower opportunity cost than another country

Question 9

If the government imposes a price ceiling below the equilibrium price, what is the most likely outcome in the market?

Accepted Answer

A shortage of the good

Question 10

Which of the following is an example of frictional unemployment?

Accepted Answer

A recent college graduate searching for their first job

Question 11

The law of demand states that, ceteris paribus:

Accepted Answer

As the price of a good increases, the quantity demanded decreases

Question 12

If nominal GDP in 2022 is $$5,000$$ and the GDP deflator is $$125$$, what is real GDP in 2022?

Accepted Answer

$$4,000$$

Question 13

Which of the following would cause a rightward shift in the supply curve for smartphones?

Accepted Answer

A technological improvement in smartphone manufacturing

Question 14

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

Accepted Answer

$$5\%$$

Question 15

Which of the following is a problem with using GDP as a measure of well-being?

Accepted Answer

GDP does not account for the distribution of income

Question 16

Suppose the CPI in 2010 was $$110$$ and in 2020 it was $$154. If a $$worker earned $$\40$$,000$ in 2010, what is the equivalent salary in 2020 dollars?

Accepted Answer

$$\56$$,000$

Question 17

Which of the following would NOT be considered part of the working-age population?

Accepted Answer

A 15-year-old high school student

Question 18

If a country moves from a point inside its production possibilities frontier (PPF) to a point on the PPF, what does this represent?

Accepted Answer

An increase in efficiency

Question 19

Which of the following is an example of a normative economic statement?

Accepted Answer

"The government should increase the minimum wage to reduce poverty."

Question 20

If the government increases unemployment benefits, what is the likely effect on the natural rate of unemployment?

Accepted Answer

It will increase, as job search becomes less costly

Macroeconomics Midterm Study Guide: Key Concepts and Applications

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