Q: Which formula is used to calculate the unemployment rate?

$$\frac{\text{Number of people unemployed}}{\text{Number of people in the labor force}} \times 100$$

Q: Which formula is used to calculate the Consumer Price Index (CPI)?

$$\frac{\text{Cost of CPI basket at current prices}}{\text{Cost of CPI basket at base period prices}} \times 100$$

Question 1

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

Accepted Answer

The market value of all final goods and services produced within a country in a given time period.

Question 2

In the circular flow diagram, which component represents payments from households to firms for goods and services?

Accepted Answer

Consumption expenditure (C)

Question 3

Which of the following is NOT included in GDP?

Accepted Answer

The value of plywood sold to a furniture manufacturer.

Question 4

If a country exports more than it imports, what is the effect on its net exports and GDP?

Accepted Answer

Net exports are positive, and payments flow into the country.

Question 5

Which formula correctly represents the expenditure approach to calculating GDP?

Accepted Answer

$$Y = C + I + G + X - M$$

Question 6

What is the main difference between nominal GDP and real GDP?

Accepted Answer

Nominal GDP values goods and services at current year prices, while real GDP values them at base year prices.

Question 7

Which of the following is a limitation of real GDP as a measure of economic well-being?

Accepted Answer

It excludes household production that is not traded in markets.

Question 8

If the price of a Big Mac is $$5.66 in the US and 22.40 yuan (≈ 3.24) in $$China, which method would best compare the standard of living between the two countries?

Accepted Answer

Real GDP per person at purchasing power parity (PPP) prices

Question 9

Which formula is used to calculate the unemployment rate?

Accepted Answer

$$\frac{	ext{Number of people unemployed}}{	ext{Number of people in the labor force}} 	imes 100$$

Question 10

Carla has no job, is ready and wants to work, but has not searched for any jobs in the last 4 weeks. According to the official definition, what is Carla's labor market status?

Accepted Answer

Marginally attached worker (not in the labor force)

Question 11

Which type of unemployment is caused by normal labor turnover, such as people switching jobs or entering the workforce for the first time?

Accepted Answer

Frictional unemployment

Question 12

During a recession, which of the following typically occurs?

Accepted Answer

Unemployment rate increases and real GDP decreases.

Question 13

Which formula is used to calculate the Consumer Price Index (CPI)?

Accepted Answer

$$\frac{	ext{Cost of CPI basket at current prices}}{	ext{Cost of CPI basket at base period prices}} 	imes 100$$

Question 14

Which of the following is a bias that causes the CPI inflation rate to overestimate actual inflation?

Accepted Answer

New goods bias

Question 15

If the CPI last year was 200 and this year it is 210, what is the CPI inflation rate?

Accepted Answer

$$\frac{210 - 200}{200} 	imes 100 = 5\%$$

Question 16

Which formula is used to calculate the growth rate of real GDP?

Accepted Answer

$$\frac{	ext{Real GDP in current year} - 	ext{Real GDP in previous year}}{	ext{Real GDP in previous year}} 	imes 100$$

Question 17

According to the Rule of 70, if a country's real GDP grows at 7% per year, how many years will it take for real GDP to double?

Accepted Answer

$$\frac{70}{7} = 10$$ years

Question 18

Which of the following best describes the effect of an increase in labor productivity on potential GDP?

Accepted Answer

Potential GDP increases because each hour of labor produces more output.

Question 19

Which economic growth theory argues that technology improvements are not random and that knowledge is a public good, allowing for permanent growth?

Accepted Answer

New growth theory

Macroeconomics Study Notes: GDP, Labor Markets, Inflation, and Economic Growth

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