MACRO EXAM

The unemployment rate is calculated as the ratio between

• unemployment and the working age population

• unemployment and employment

  
  

• employment plus unemployment and unemployment

  
  

• unemployment and labor force

  
  

It is usually the case that nominal GDP is above real GDP in years following the base year, and nominal GDP is below real GDP in years prior to the base year. The common reason for why this happens is that

• real GDP in an economy tends to grow over time thanks to economic growth.

  
  

• the price level tends to decrease over time.

  
  

• the population of an economy tends to grow over time.

  
  

• the price level tends to increase over time.

  
  

Which statement is correct?

• A CPI inflation rate larger than the GDP deflator inflation rate could be explained by the increase in the cost of some production input.

• A GDP deflator inflation rate larger than the CPI inflation rate can be explained by a reduction in the export prices larger than the average decrease in prices of domestically produced goods.

  
  

• A GDP deflator inflation rate lower than the CPI inflation rate can be explained by an increase in the price of imported goods that is higher than the average increase in prices of domestically produced goods.

  
  

• None of the answers is correct.

  
  

For this question, assume that 1995 is the base year. We know with certainty that

• real GDP is larger than nominal GDP from 1996 to 2000.

  
  

• nominal GDP is always larger than real GDP before 1995.

  
  

• real GDP and nominal GDP were equal in 1995.

  
  

• real GDP and nominal GDP would be equal for the entire period from 1996 to 2000.

  
  

A period of real GDP growth is referred to as

• hyperinflation

• recession

• inflation

• expansion

If the CPI in a country in 2000 was 200 and in 2001 was 220, the CPI inflation rate in 2001 was

• 30 percent

  
  

• 10 percent

  
  

• we need to know the base year to be able to calculate the inflation rate.

  
  

• we don't have enough information on the GDP deflator to calculate the inflation rate.

  
  

One of the reasons macroeconomists have concerns about inflation is that inflation causes

• none of the answers is correct.

  
  

• real GDP to exceed nominal GDP.

  
  

• real GDP to rise.

  
  

• nominal GDP to fall.

  
  

Suppose that the number of unemployed decreased and the size of the labour force remained unchanged. Based on this information, we know with certainty that

• the unemployment rate decreased.

  
  

• the number of discouraged workers decreased.

  
  

• the unemployment rate increased.

  
  

• employment decreased.

  
  

If a country's population is growing over time, then we know with certainty that

• the country's inflation rate is positive.

  
  

• the country's nominal GDP growth is above real GDP growth.

  
  

• the unemployment rate must be increasing over time.

  
  

• the country's real GDP grows faster than its real GDP per capita.

  
  

Which of the following statements about real GDP is correct?

• It increases if the nominal GDP growth is larger than the GDP deflator inflation.

  
  

• It decreases if prices drop.

  
  

• It always increases when prices increase.

  
  

• Its growth rate is always smaller than the growth rate of the GDP deflator.