Question 1

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

Accepted Answer

A student chooses to spend an hour studying for an exam instead of going to a movie, giving up the enjoyment of the movie.

Question 2

Which of the following is a positive economic statement?

Accepted Answer

Raising taxes on gasoline will reduce gasoline consumption.

Question 3

Suppose an economy can produce only two goods: wheat and steel. If the economy is operating on its production possibilities frontier (PPF), which of the following is true?

Accepted Answer

The economy is using all its resources efficiently.

Question 4

Country A can produce 10 units of wine or 20 units of cheese per day. Country B can produce 8 units of wine or 16 units of cheese per day. Which country has the comparative advantage in producing wine?

Accepted Answer

Neither country, because their opportunity costs are the same.

Question 5

In the circular flow model, which of the following best describes the flow of goods and services?

Accepted Answer

From firms to households in the product market.

Question 6

Which of the following would cause a rightward shift in the demand curve for electric cars?

Accepted Answer

An increase in consumer income, assuming electric cars are normal goods.

Question 7

If the government imposes a price ceiling below the equilibrium price in the market for rental apartments, what is the likely result?

Accepted Answer

A shortage of apartments.

Question 8

Suppose the supply of smartphones increases while demand remains unchanged. What will happen to the equilibrium price and quantity?

Accepted Answer

Price will decrease and quantity will increase.

Question 9

Which of the following is included in the calculation of a country's Gross Domestic Product (GDP)?

Accepted Answer

The value of a new car produced and sold domestically.

Question 10

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 11

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

Accepted Answer

GDP does not include the value of leisure time.

Question 12

If the labor force participation rate increases while the working-age population remains constant, what must be true?

Accepted Answer

The number of people in the labor force has increased.

Question 13

Which type of unemployment is most likely to increase during a recession?

Accepted Answer

Cyclical unemployment

Question 14

The Consumer Price Index (CPI) in 2021 was $$ 250 $$ and in 2022 it was $$ 260 . $$What was the inflation rate between 2021 and 2022?

Accepted Answer

$$ 3.85\% $$

Question 15

If the nominal wage in 2010 was $$ \ 20$$ $$ per hour and the CPI was  200$$ $$, and in 2020 the nominal wage is $$ \$$ 25 $$ per hour and the CPI is $$ 250 $$, what happened to the real wage?

Accepted Answer

The real wage stayed the same.

Question 16

If a country’s real GDP doubles in 20 years, what is the approximate annual growth rate according to the Rule of 70?

Accepted Answer

$$ 3.5\% $$

Question 17

In the market for loanable funds, which of the following would likely cause the real interest rate to increase?

Accepted Answer

An increase in the demand for loanable funds.

Question 18

During an economic expansion, what typically happens to the unemployment rate and the inflation rate?

Accepted Answer

Unemployment rate falls and inflation rate rises.

Question 19

Suppose the government increases spending on infrastructure, leading to higher employment and income. Which component of GDP is directly affected by this policy?

Accepted Answer

Government purchases

Question 20

A country has a working-age population of 100 million, 60 million employed, and 5 million unemployed. What is the labor force participation rate?

Accepted Answer

$$ 65\% $$

Macroeconomics Study Guide: Foundations, Markets, GDP, Unemployment, and Economic Growth

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