Q: Which of the following equations correctly represents the calculation of the unemployment rate?

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

Q: If nominal GDP in year 2 is $500 billion and the GDP deflator is 125 (base year = 100), what is real GDP in year 2?

$$\text{Real GDP} = \frac{\500$$\ \text{billion}}{1.25} = \$$400\ \text{billion}$$

Question 1

Suppose a country can produce either 100 units of good X or 200 units of good Y using all its resources. If the country is currently producing 60 units of good X and 80 units of good Y, what does this point represent on the Production Possibilities Frontier (PPF)?

Accepted Answer

A point inside the PPF, indicating resources are underutilized or misallocated.

Question 2

Which of the following best describes opportunity cost?

Accepted Answer

The highest-valued alternative forgone when a choice is made.

Question 3

If Canada can produce wheat at a lower opportunity cost than the United States, but the United States can produce cars at a lower opportunity cost than Canada, which economic principle is illustrated if both countries specialize and trade?

Accepted Answer

Comparative advantage

Question 4

Which of the following equations correctly represents the calculation of the unemployment rate?

Accepted Answer

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

Question 5

A country’s PPF shifts outward. Which of the following is NOT a likely cause of this shift?

Accepted Answer

A decrease in the working-age population

Question 6

Which of the following best describes allocative efficiency?

Accepted Answer

When goods and services are produced on the PPF and in the quantities that provide the greatest possible benefit

Question 7

If the marginal cost (MC) of producing one more unit of a good is $$10, and the marginal benefit (MB) is 8$$, what should a rational producer do?

Accepted Answer

Produce less of the good, since MC \u003e MB

Question 8

Which of the following is included in the calculation of GDP using the expenditure approach?

Accepted Answer

Sum of consumption expenditures, investment, government expenditures, and net exports

Question 9

Which of the following is NOT counted in Canada’s GDP?

Accepted Answer

A car produced in Japan and sold in Canada

Question 10

If nominal GDP in year 2 is $500 billion and the GDP deflator is 125 (base year = 100), what is real GDP in year 2?

Accepted Answer

$$	ext{Real GDP} = \frac{\500$$\ 	ext{billion}}{1.25} = \$$400\ 	ext{billion}$$

Question 11

Which of the following is a limitation of using real GDP as a measure of standard of living?

Accepted Answer

It does not account for household production or underground economic activity.

Question 12

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

Accepted Answer

$$	ext{Unemployment Rate} = \frac{15\ 	ext{million}}{150\ 	ext{million}} 	imes 100 = 10\%$$

Question 13

Which of the following best explains why unemployment is a problem for society?

Accepted Answer

It results in lost income and production, and can permanently damage a person’s job prospects by destroying human capital.

Question 14

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

Accepted Answer

An increase in the standard of living

Question 15

Which of the following is an example of capital accumulation?

Accepted Answer

A company builds a new factory to produce more goods.

Question 16

Which of the following is true about the circular flow of income and expenditure?

Accepted Answer

Households supply factors of production to firms and receive income in return.

Question 17

If the value of exports (X) is $$200 billion and the value of imports (M) is 250 $$billion, what is the value of net exports (NX)?

Accepted Answer

$$NX = X - M = 200 - 250 = -50\ 	ext{billion}$$

Question 18

Which of the following is an example of a final good included in GDP?

Accepted Answer

A new car sold to a consumer

Question 19

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

Accepted Answer

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

Core Principles and Measurement in Macroeconomics: Production, GDP, and Unemployment

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