Question 1

Which of the following best describes what Gross Domestic Product (GDP) measures?

Accepted Answer

The total value of all final goods and services produced within a country's borders in a given period.

Question 2

Suppose in 2022, the nominal GDP of a country is $$\1$$,200$$ billion and the GDP deflator is 120$. What is the real GDP for 2022?

Accepted Answer

$$\1$$,000$ billion

Question 3

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

Accepted Answer

The purchase of used cars by consumers.

Question 4

If the Consumer Price Index (CPI) was $$200 in 2021 $$and $$210 in 2022$$, what was the inflation rate between 2021 and 2022?

Accepted Answer

$$5\%$$

Question 5

A discouraged worker is best described as:

Accepted Answer

Someone who has stopped looking for work because they believe no jobs are available for them.

Question 6

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

Accepted Answer

GDP does not account for the value of household production or the underground economy.

Question 7

If the labor force in a country is $$150$$ million and $$15$$ million people are unemployed, what is the unemployment rate?

Accepted Answer

$$10\%$$

Question 8

Which of the following best illustrates structural unemployment?

Accepted Answer

A factory worker loses their job because their skills are no longer needed due to automation.

Question 9

If the nominal interest rate is $$8\%$$ and the inflation rate is $$3\%$$, what is the real interest rate?

Accepted Answer

$$5\%$$

Question 10

Using the Rule of 70, how many years will it take for an economy growing at $$2\%$$ per year to double in size?

Accepted Answer

$$35$$ years

Question 11

Which of the following is an example of direct finance?

Accepted Answer

A corporation issues bonds directly to investors.

Question 12

If the labor force participation rate is $$60\%$$ and the working-age population is $$200$$ million, what is the size of the labor force?

Accepted Answer

$$120$$ million

Question 13

Suppose the government increases its budget deficit, leading to higher interest rates. What is this effect called in the market for loanable funds?

Accepted Answer

Crowding out

Question 14

Which of the following would cause a movement along the supply curve in the market for loanable funds?

Accepted Answer

A change in the real interest rate

Question 15

If real GDP increases by $$4\%$$ and the population increases by $$2\%$$, what is the growth rate of real GDP per capita?

Accepted Answer

$$2\%$$

Question 16

Which of the following is a determinant of long-run economic growth?

Accepted Answer

Increases in human capital

Question 17

If the CPI overstates inflation due to not accounting for consumers switching to cheaper substitutes, this is known as:

Accepted Answer

Substitution bias

Question 18

A country has the following data for a given year: Consumption = $$\500$ billion, Investment = $$\$$200$$ billion, Government Purchases = $$\150$ billion, Net Exports = $$-\$$50$$ billion. What is the country's GDP?

Accepted Answer

$$\800$ billion

Question 19

Which of the following best describes the difference between actual GDP and potential GDP?

Accepted Answer

Actual GDP is the economy's current output, while potential GDP is the maximum sustainable output.

Question 20

If the price level in 2020 is $$150$$ and in 2021 is $$165$$, what is the inflation rate from 2020 to 2021?

Accepted Answer

$$10\%$$

Macroeconomics Exam 2 Study Guide: GDP, Unemployment, and Economic Growth

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