Unit 3: Macroeconomics Test Review

What is the primary focus of macroeconomics?

• Individual consumer behavior

• The behavior and performance of an economy as a whole

• Business micromanagement strategies

• International trade agreements

Which of the following correctly matches the economic goal with its primary indicator?

• Economic Growth ---> Unemployment Rate; Price Stability ---> Real GDP; Full/Maximum Employment ---> Consumer Price Index

• Economic Growth ---> Consumer Price Index; Price Stability ---> Unemployment Rate; Full/Maximum Employment ---> Real GDP

• Economic Growth ---> Real GDP; Price Stability ---> Consumer Price Index; Full/Maximum Employment ---> Unemployment Rate

• Economic Growth ---> Real GDP; Price Stability ---> Unemployment Rate; Full/Maximum Employment ---> Consumer Price Index

In the GDP equation GDP = C + I + G + (X-M), what does "I" represent?

• Income

• Interest rates

• Investment

• Imports

Which of the following would NOT be counted in GDP calculations?

• A new car produced and sold in the country

• A used car sold by a dealership

• A haircut provided by a licensed stylist

• Construction of a new government building

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

• a) Nominal GDP includes services, while real GDP only includes goods

• b) Real GDP accounts for inflation, while nominal GDP does not

• c) Nominal GDP is calculated quarterly, while real GDP is calculated annually

• d) Real GDP includes foreign transactions, while nominal GDP does not

Which of the following best describes inflation?

• A decrease in the overall price level of goods and services

• An increase in the value of a country's currency

• A general increase in prices and fall in the purchasing value of money

• A rapid increase in a country's GDP

What is NOT considered a potential cause of inflation?

• Too much money chasing too few goods

• Excess demand

• Supply shocks

• Increased Government Regulations

How is the unemployment rate typically calculated?

• Total unemployed / Total population

• Total unemployed / Labor force

• Total employed / Total population

• Total employed / Labor force

Which of the following is NOT included in the official unemployment rate?

• Those actively seeking work

• Those who have been unemployed for less than 15 weeks

• Discouraged workers who have stopped looking for jobs

• Those who are temporarily laid off

What does the business cycle model illustrate?

• How stock prices fluctuate over time

• How interest rates change monthly

• How economic activity fluctuates over time

• How inflation rates vary between countries