Macroeconomics Assignment: GDP, Unemployment, and Inflation

This macroeconomics assignment provides solutions to a range of questions covering key concepts in macroeconomics. The assignment is divided into two parts, with the first part consisting of multiple-choice questions testing the understanding of GDP, national income, and the circular flow model. It also covers topics such as investment, savings, and the factors that influence them, as well as unemployment and inflation. The second part involves more in-depth questions, including calculations and explanations related to GDP, nominal and real GDP, GDP deflator, and GDP per capita. The assignment delves into the measurement of economic growth and the limitations of using GDP as a sole indicator of economic well-being, as well as the effects of inflation and unemployment on the economy. It also includes references to key macroeconomic literature.

Running head: MACROECONOMICS
Macroeconomics
Name of the Student
Name of the University
Course ID

1MACROECONOMICS
Table of Contents
Part One...........................................................................................................................................5
Question 1....................................................................................................................................5
Question 2....................................................................................................................................5
Question 3....................................................................................................................................5
Question 4....................................................................................................................................5
Question 5....................................................................................................................................5
Question 6....................................................................................................................................5
Question 7....................................................................................................................................5
Question 8....................................................................................................................................5
Question 9....................................................................................................................................5
Question 10..................................................................................................................................6
Question 11..................................................................................................................................6
Question 12..................................................................................................................................6
Question 13..................................................................................................................................6
Question 14..................................................................................................................................6
Question 15..................................................................................................................................6
Question 16..................................................................................................................................6
Question 17..................................................................................................................................6
Question 18..................................................................................................................................6

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Question 19..................................................................................................................................7
Question 20..................................................................................................................................7
Question 21..................................................................................................................................7
Question 22..................................................................................................................................7
Question 23..................................................................................................................................7
Question 24..................................................................................................................................7
Question 25..................................................................................................................................8
Question 26..................................................................................................................................8
Question 27..................................................................................................................................8
Question 28..................................................................................................................................8
Question 29..................................................................................................................................8
Question 30..................................................................................................................................8
Question 31..................................................................................................................................9
Question 32..................................................................................................................................9
Question 33..................................................................................................................................9
Question 34..................................................................................................................................9
Question 35..................................................................................................................................9
Question 36..................................................................................................................................9
Question 37..................................................................................................................................9
Question 38................................................................................................................................10

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Question 39................................................................................................................................10
Question 40................................................................................................................................10
Question 41................................................................................................................................10
Question 42................................................................................................................................10
Question 43................................................................................................................................10
Question 44................................................................................................................................10
Question 45................................................................................................................................10
Question 46................................................................................................................................10
Question 47................................................................................................................................11
Question 48................................................................................................................................11
Question 49................................................................................................................................11
Question 50................................................................................................................................11
Part Two.........................................................................................................................................12
Question 1..................................................................................................................................12
Question a..................................................................................................................................12
Question b..................................................................................................................................12
Question 2..................................................................................................................................14
Question a..................................................................................................................................14
Question b..................................................................................................................................14
Question 3..................................................................................................................................15

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Question a..................................................................................................................................15
Question b..................................................................................................................................15
Question c..................................................................................................................................15
Question d..................................................................................................................................15
Question e..................................................................................................................................16
Question 4..................................................................................................................................16
Question a..................................................................................................................................16
Question b..................................................................................................................................16
Question c ..........................................................................................................................16
Question d..................................................................................................................................17
Question e..................................................................................................................................17
Question 5......................................................................................................................................17
Question 5A...............................................................................................................................17
Question 5B...............................................................................................................................20
References......................................................................................................................................22

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Part One
Question 1
D) It is the income earned by Canadians
Question 2
B) Gross investment, government purchase, consumption and net exports.
Question 3
D) Business buy resources from household and from other businesses
Question 4
C) Income is a flow concept and money is a stock concept.
Question 5
E) A saving account
Question 6
B) The velocity of money is 6.5.
Question 7
D) Leakage
Question 8
B) Investment
Question 9

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D) It has both financial and real flows.
Question 10
A) Income tax
Question 11
B) Transfer payment
Question 12
A) If export increases.
Question 13
D) If exports increase more than import increase
Question 14
D) A mutual fund manager purchases additional stock of General Corporation.
Question 15
B) Consumption expenditures and goods and services.
Question 16
E) Factor payments and factors.
Question 17
A) Imports
Question 18

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C) Savings
Question 19
D) Exports
Question 20
E) None of the above
Question 21
C) The depreciation exceeds gross investment by $5.8 billion
Question 22
D) It will be necessary to add the additional inventory to aggregate expenditure to obtain this
year’s GDP.
Question 23
C) +20
Question 24
National income=Personalincome−Government transfer payment +Undistributed corporate profits+Corporate
¿ 327−103+59+38+17
¿ 338
C) 338
Question 25
B) If the increase in production was in the form of a non-market activity

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Question 26
B) GDP would rise
Question 27
B) It could be called economic growth.
Question 28
D) The value of GDP in terms of prices prevailing in a given base year.
Question 29
Nominal GDP= ( 22× $ 105 )+ ( 110 × $ 6 )+ ( 11× $ 540 )
¿ $ 2310+$ 660+$ 5940
¿ $ 8910
E) $8910
Question 30
Real GDP∈ year 2= ( 22 × $ 100 ) + ( 110 × $ 5 ) + ( 11 × $ 500 )
¿ $ 2200+$ 550+$ 5500
¿ $ 8250
D) $8250
Question 31
B) 100

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Question 32
GDP deflator= Nominal GDP
Real GDP ×100
¿ 8910
8250 ×100
¿ 108
C) 108
Question 33
B) Real GDP divided by population
Question 34
C) The increase in real GDP per capita divided by previous year’s real GDP per capita times 100
Question 35
C) They understate economic welfare by not taking into account increase in leisure.
Question 36
B) If the quality of products and services, leisure time and environmental conditions all do not
change.
Question 37
C) The percentage of labor force which is unemployed.
Question 38
E) All of the above

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Question 39
E) A retired schoolteacher who is seeking a part-time job at the local library.
Question 40
D) All of the above
Question 41
B) GDP will understate the level of economic activity
Question 42
B) It is associated with the level of GDP
Question 43
C) It would remain unchanged.
Question 44
C) They may cause the official unemployment rate to understate the real amount of
unemployment.
Question 45
B) 2%
Question 46
C) The GDP gap is $21 billion.
Question 47

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Inflation rate= CPI ∈2004−CPI∈2003
CPI ∈2003 ×100
¿ 126−120
120 ×100
¿ 6
120 ×100
¿ 5 %
B) 5%
Question 48
C) It fell by 2%
Question 49
B) 11%
Question 50
B) If the number of people in the labour force increased more than the number of people
employed.