Question 1

Suppose the adult population of a country is 200 million. 120 million are employed, 10 million are unemployed and actively seeking work, and the rest are not in the labor force. What is the labor force participation rate?

$$	ext{Labor Force Participation Rate} = \frac{	ext{Labor Force}}{	ext{Adult Population}} 	imes 100$$

Accepted Answer

Question 2

Which of the following best describes structural unemployment?

Accepted Answer

Unemployment that occurs when there are fewer jobs than workers due to changes in the structure of the economy.

Question 3

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

Accepted Answer

It will increase because people may take longer to search for jobs.

Question 4

Which of the following equations correctly represents national saving in a closed economy?

Accepted Answer

$$S = Y - C - G$$

Question 5

Suppose the government runs a budget deficit. What is the likely effect on the market for loanable funds?

Accepted Answer

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

Question 6

If private saving is $$500$$ and public saving is $$-200$$, what is national saving?

Accepted Answer

$$300$$

Question 7

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

Accepted Answer

Determining the level of government spending.

Question 8

If the real GDP per capita in a country increases from $$20,000 to$$ $$21,000$$ over one year, what is the economic growth rate?

Accepted Answer

$$2.5\%$$

Question 9

According to the Solow growth model, what happens to the marginal product of capital as more capital is accumulated?

Accepted Answer

It decreases due to diminishing returns.

Question 10

Which government policy is most likely to promote long-run economic growth?

Accepted Answer

Investing in education and research.

Question 11

Which of the following would cause a rightward shift in the aggregate demand (AD) curve?

Accepted Answer

An increase in consumer confidence.

Question 12

What is the slope of the long-run aggregate supply (LRAS) curve, and why?

Accepted Answer

Vertical, because output is determined by resources and technology, not prices.

Question 13

If the economy is operating below its natural level of output, which of the following is most likely true?

Accepted Answer

Unemployment is above the natural rate.

Question 14

Suppose the government increases spending without raising taxes. According to the loanable funds model, what is the likely effect on investment?

Accepted Answer

Investment decreases due to crowding out.

Question 15

Which of the following best explains cyclical unemployment?

Accepted Answer

It is caused by changes in the business cycle, such as recessions.

Question 16

If $$Y = 10,000$$, $$C = 6,000$$, $$G = 2,000$$, and $$NX = 500$$, what is investment ($$I) in $$the economy?

$$Y = C + I + G + NX$$

Accepted Answer

$$I = 1,500$$

Question 17

Which of the following would shift the short-run aggregate supply (SRAS) curve to the left?

Accepted Answer

An increase in the cost of raw materials.

Question 18

During a business cycle expansion, which of the following typically occurs?

Accepted Answer

Unemployment falls and output rises.

Question 19

If the interest rate is above the equilibrium in the loanable funds market, what will happen?

Accepted Answer

The quantity of loanable funds supplied will exceed the quantity demanded.

Question 20

Suppose a country experiences a technological breakthrough that increases productivity. What is the likely effect on the long-run aggregate supply (LRAS) curve?

Accepted Answer

The LRAS curve shifts to the right.

Macroeconomics Study Guide: Unemployment, Financial System, Economic Growth, and Aggregate Demand & Supply

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