Question 1

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

Accepted Answer

The value of the next best alternative foregone when a choice is made.

Question 2

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?

Accepted Answer

2 units of clothing

Question 3

If the marginal benefit of consuming an additional slice of pizza is less than the marginal cost, what should a rational consumer do?

Accepted Answer

Reduce pizza consumption.

Question 4

Which of the following statements is an example of positive economics?

Accepted Answer

"Raising taxes will reduce consumer spending."

Question 5

A production possibilities frontier (PPF) that is bowed outward illustrates which economic concept?

Accepted Answer

Increasing opportunity cost

Question 6

Country A can produce 10 cars or 20 computers in a day. Country B can produce 8 cars or 16 computers in a day. Which country has the absolute advantage in car production, and which has the comparative advantage?

Accepted Answer

Country A has absolute advantage in cars; both have the same opportunity cost, so neither has comparative advantage.

Question 7

If the price of a substitute good increases, what is the likely effect on the demand curve for the original good?

Accepted Answer

The demand curve shifts to the right.

Question 8

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

Accepted Answer

A decrease in the cost of microchips (an input).

Question 9

Suppose the government sets a price ceiling below the equilibrium price for gasoline. What is the most likely outcome?

Accepted Answer

A shortage of gasoline.

Question 10

Which of the following is included in the calculation of GDP?

Accepted Answer

The purchase of a new factory machine by a business.

Question 11

Given the following data for a country in 2023: Consumption = $$500B, Investment = 200B$$, Government Spending = $$300B, Exports = 100B$$, Imports = $150B. What is the GDP?

Accepted Answer

$950B

Question 12

Nominal GDP in 2022 was $1,000B. The GDP deflator in 2022 was 125. What is the real GDP for 2022?

Accepted Answer

$800B

Question 13

If the Consumer Price Index (CPI) was 120 in 2021 and 132 in 2022, what was the inflation rate between 2021 and 2022?

Accepted Answer

10%

Question 14

Which of the following is a problem with using the CPI to measure the cost of living?

Accepted Answer

It ignores the introduction of new goods.

Question 15

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

Accepted Answer

4%

Question 16

Which group is NOT included in the official calculation of the unemployment rate?

Accepted Answer

Discouraged workers who have stopped looking for work.

Question 17

Suppose the working-age population is 200 million, the labor force is 150 million, and 135 million are employed. What is the unemployment rate?

Accepted Answer

10%

Question 18

Which of the following is an example of structural unemployment?

Accepted Answer

A factory worker whose job is replaced by automation.

Question 19

Which of the following would increase the natural rate of unemployment?

Accepted Answer

An increase in the minimum wage.

Question 20

If a country experiences economic growth, how is this represented on the production possibilities frontier (PPF)?

Accepted Answer

The PPF shifts outward.

Macroeconomics Midterm Study Guide: Key Concepts and Applications

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