Test1 Sample Answers

MACROECONOMICS
SAMPLE QUESTIONS: TEST 1

I. Complete the following sentences about economics: Economics is the social science that
a. Economics is the social science that studies how _to use limited resources__How
to use limited resources______________________
in order to satisfy unlimited needs and wants _____________
b. Three questions are addressed by an economic system:

____What to produce______________________,
__________How.._________________,
_________for whom__________________
II. Identify in the following statements what is: a positive statement, a normative statement,
a prediction, a forecast, a stock variable, a flow variable
a. The unemployment rate is at 8 % positive
b. Investment should increase_normative_____________ .
c. Last month we recruited 25 new salesmen _____flow___________
d. The interest rate should be reduced to 3% normative
e. According to the present fiscal policy the tax rate will go up next year _ prediction __
f. On October 8, the number of the employees working for the company was 48
stock____
III. In the calculation of the GDP what is the difference between intermediate good and final
good ? Illustrate with an example.
Inter is an input in the next production process….final good ready to be sold to customer
IV. Use in one text describing the economy: SCARCITY, CHOICE and OPPORTUNITY COST
Because of scarcity we need to make a choice on what needs and wants to fulfill and with every
choice we sacrifice another choice, hence the opportunity cost.
V. Which of the following activities should be included in Canada's GDP?

(Answer with INCLUDED-added (+); INCLUDED- subtracted (-); or Not included (N))
1 An individual receives an income cheque of $500 from his employer +
2 An imported shipment of fruits valued at $ 350,000 -
3 The purchase of a second-hand car for $6,000 N
4 The individual uses $300 to buy Italian-made leather jacket from a Montreal store +
5 The government paying a construction company to build a bridge +
6 !00 $ gift to your cousin_N________
VI. Fill in the blanks with the appropriate proposition LETTER: A) Increase in demand,
B) Decrease in demand, C) Increase in the quantity demanded, D) decrease in the
quantity demanded:
A C B D
P P P P
Q Q Q Q
VII. Multiple choice questions: (highlight or underline the letter beside the correct
statement).
1. If apples and oranges are substitutes for each other, an increase in the price of apples will:
a. increase the demand for apples and a decrease in the demand of oranges
b. decrease the quantity of apples demanded and an increase in the demand for
orange
c. increase in the quantity demanded for apples and a decrease in the demand
for oranges
d. increase the demand for apples and a decrease in the quantity demanded
for oranges
2. A shift to the left in the demand curve for the normal good X could be caused by:
a. a decrease in consumer incomes
b. an increase in the price of a substitute for X
c. an increase in the price of product X
d. a decrease in the price of product X
3. What will cause the supply curve for a product to move to the right
a. Decrease in the price of joint in production
b. Decrease in the number of suppliers
c. Increase in the price of a substitute in production
d. Decrease in the price of a substitute in production
4. The Nominal GDP is lower than the REAL GDP when

a. The Price Index is lower than 100
b. The Price Index is higher than 100
c. The Price Index is equal to the base year’s Index
d. We cannot tell
5. The GDP per capita allows the comparison between
a. GDP’s of different years

b. Real and Nominal GDP
c. GDP’s after considering the distribution of wealth
d. GDP’s of different countries
6. In Economics, the resource land refers to:

a. The land owned by the household to build houses
b. Agricultural products
c. Everything extracted from the soil
d. All natural resources
7. Determine the Unemployment rate in a population where the number of employed is 22

million and that of the Unemployed is 2 million
a. 9.1%
b. 8.3%
c. 10%
d. 11%
VIII.The table below shows the output and the prices of Switzerland in 2018 and in 2020.
Goods produced Price Q 2018 Price Q 2020
2018 2020
Chocolate(3x400) $3 400 $3 440
Cheese $6 200 $10 210
Watches $20 80 $22 120
a) Calculate the Nominal GDP for 2018 and 2020

2018: (3x400) + (6x200) +(20x80) = 4000
2020: : (3x440) + (10x210) +(22x120) = 6060
b) Calculate the Real GDP for 2020 using 2018 as a base.

(3x440) + (6x210) +(20x120) = 4980
PI=( 6060/4980) x 100 =121.7 22% up

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MACROECONOMICS

SAMPLE QUESTIONS: TEST 1

in order to satisfy unlimited needs and wants _____________

b. Three questions are addressed by an economic system:

a. The unemployment rate is at 8 % positive

b. Investment should increase_normative_____________ .

c. Last month we recruited 25 new salesmen _____flow___________

d. The interest rate should be reduced to 3% normative

V. Which of the following activities should be included in Canada's GDP?

1 An individual receives an income cheque of $500 from his employer +

2 An imported shipment of fruits valued at $ 350,000 -

3 The purchase of a second-hand car for $6,000 N

5 The government paying a construction company to build a bridge +

6 !00 $ gift to your cousin_N________

4. The Nominal GDP is lower than the REAL GDP when

5. The GDP per capita allows the comparison between

a. GDP’s of different years

6. In Economics, the resource land refers to:

7. Determine the Unemployment rate in a population where the number of employed is 22

Goods produced Price Q 2018 Price Q 2020

Chocolate(3x400) $3 400 $3 440

Cheese $6 200 $10 210

Watches $20 80 $22 120

a) Calculate the Nominal GDP for 2018 and 2020

2020: : (3x440) + (10x210) +(22x120) = 6060

b) Calculate the Real GDP for 2020 using 2018 as a base.

PI=( 6060/4980) x 100 =121.7 22% up

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c. Last month we recruited 25 new salesmen _flow_______