Macroeconomic
Theory and Policy
ECO𝟐𝟎𝟐Y
MICHAEL HO
Test 1 – Solutions
OCTOBER 𝟐𝟓, 𝟐𝟎𝟐𝟓
START TIME: 𝟏𝟏 AM
DURATION: 𝟕𝟓 MINUTES
IMPORTANT:
(i) A zero will be assigned if any page is separated from this test.
(ii) You must ensure your handwriting is legible and only non-programmable
calculators are allowed.
(iii) You must put all your answers to multiple-choice questions in the last page with
the bubble sheet provided or a 5-mark penalty will be imposed.
(iv) You may answer all questions in point form, but only in the designated space or
page(s).
Question 𝟏 –𝟐𝟎 𝟐𝟏 𝟐𝟐
(a) 6 4
(b) 40 5 8
(c) 12 Total
Sub-Total 𝟒𝟎 𝟏𝟏 𝟐𝟒 𝟕𝟓
, Answer all multiple-choice questions (2 marks each) and put all your answers in the last
page with the bubble sheet provided or a 5-mark penalty will be imposed.
1. The standard of living typically refers to
(A) the rate of unemployment. (B) wealth per capita.
(C) output per capita. (D) all of the above
(E) none of the above
2. Economists have suggested that the relatively higher unemployment in Europe
has been caused by which of the following?
(A) Relatively high unemployment benefits.
(B) Relatively high level of worker protection.
(C) Inadequate macroeconomic policies.
(D) All of the above.
(E) None of the above.
3. Since 1960 inequality in the United States has ________.
(A) increased (B) decreased
(C) not changed (D) fallen significantly
(E) none of the above
4. Use the following information to answer this question. If nominal GDP rises from
$100 trillion to $120 trillion, while the GDP deflator rises from 2.0 to 2.2, the
percentage change in real GDP is approximately equal to ________.
(A) -10% (B) 10% (C) 20% (D) 9.1% (E) 0%
5. An individual is said to be a discouraged worker if he or she ________.
(A) is working, but prefers not to work
(B) is working part time, but would prefer a full time job
(C) is working in jobs she/he is not suited for
(D) wants to work, and is actively searching for a job
(E) wants to work, but has given up searching for a job
6. Which of these calculations will yield the GDP deflator?
(A) Divide nominal GDP by the real GDP.
(B) Divide the real GDP by the consumer price index.
(C) Multiply nominal GDP by the consumer price index.
(D) Multiply nominal GDP by the real GDP.
(E) None of the above.
7. Which of the following about the Phillips curve is not correct?
(A) It is about GDP growth and unemployment. (B) It was discovered by Phillips.
(C) It is about inflation rate and unemployment rate. (D) It is downward sloping.
(E) None of the above.
Theory and Policy
ECO𝟐𝟎𝟐Y
MICHAEL HO
Test 1 – Solutions
OCTOBER 𝟐𝟓, 𝟐𝟎𝟐𝟓
START TIME: 𝟏𝟏 AM
DURATION: 𝟕𝟓 MINUTES
IMPORTANT:
(i) A zero will be assigned if any page is separated from this test.
(ii) You must ensure your handwriting is legible and only non-programmable
calculators are allowed.
(iii) You must put all your answers to multiple-choice questions in the last page with
the bubble sheet provided or a 5-mark penalty will be imposed.
(iv) You may answer all questions in point form, but only in the designated space or
page(s).
Question 𝟏 –𝟐𝟎 𝟐𝟏 𝟐𝟐
(a) 6 4
(b) 40 5 8
(c) 12 Total
Sub-Total 𝟒𝟎 𝟏𝟏 𝟐𝟒 𝟕𝟓
, Answer all multiple-choice questions (2 marks each) and put all your answers in the last
page with the bubble sheet provided or a 5-mark penalty will be imposed.
1. The standard of living typically refers to
(A) the rate of unemployment. (B) wealth per capita.
(C) output per capita. (D) all of the above
(E) none of the above
2. Economists have suggested that the relatively higher unemployment in Europe
has been caused by which of the following?
(A) Relatively high unemployment benefits.
(B) Relatively high level of worker protection.
(C) Inadequate macroeconomic policies.
(D) All of the above.
(E) None of the above.
3. Since 1960 inequality in the United States has ________.
(A) increased (B) decreased
(C) not changed (D) fallen significantly
(E) none of the above
4. Use the following information to answer this question. If nominal GDP rises from
$100 trillion to $120 trillion, while the GDP deflator rises from 2.0 to 2.2, the
percentage change in real GDP is approximately equal to ________.
(A) -10% (B) 10% (C) 20% (D) 9.1% (E) 0%
5. An individual is said to be a discouraged worker if he or she ________.
(A) is working, but prefers not to work
(B) is working part time, but would prefer a full time job
(C) is working in jobs she/he is not suited for
(D) wants to work, and is actively searching for a job
(E) wants to work, but has given up searching for a job
6. Which of these calculations will yield the GDP deflator?
(A) Divide nominal GDP by the real GDP.
(B) Divide the real GDP by the consumer price index.
(C) Multiply nominal GDP by the consumer price index.
(D) Multiply nominal GDP by the real GDP.
(E) None of the above.
7. Which of the following about the Phillips curve is not correct?
(A) It is about GDP growth and unemployment. (B) It was discovered by Phillips.
(C) It is about inflation rate and unemployment rate. (D) It is downward sloping.
(E) None of the above.
