EXERCISE
I. Multiple choice questions:
1. Which of the following statements is correct?
a. GDP deflator is more accurate than CPI in reflecting the prices of goods and services purchased by consumers.
b. CPI is more accurate than GDP deflator in reflecting the prices of goods and services purchased by consumers.
c. GDP deflator and CPI are equally accurate in reflecting the prices of goods and services purchased by consumers.
d. GDP deflator is more commonly used than CPI in estimating inflation.
2. CPI in the first year is 150, in the second year is 160, and in the third year is 175. The inflation rate is
a. 1.07% between first and second years, and 1.09% between second and third years
b. 5.4% between first and second years, and 9.4% between second and third years
c. 6.7% between first and second years, and 9.4% between second and third years
d. 10 between first and second years, and 1.09% between second and third years
3. If GDP of the economy increases, then
a. The economy's income increases and the economy's saving decreases
b. The economy's income and savings both increase
c. The economy's income falls and the economy's spending increases
d. The economy's income and spending both increase.
4. If people in Vietnam buy clothes made in Japan, then
a. Vietnam's household spending increases, Vietnam's net exports fall and Vietnam's GDP falls
b. Vietnam's household spending increases, VN's net exports decrease, and Vietnam's GDP remains unchanged
c. Vietnam's household spending declines, Vietnam's net exports increase and Vietnam's GDP increases
d. Vietnam's household spending declines, VN's net exports increase, and Vietnam's GDP remains unchanged
5. If nominal GDP is 10,000 billion and real GDP is 8,000 billion, the GDP deflator is
a. 80, and this index means a 20% decrease in price from the base year
b. 80, and this index means an 80% increase in price from the base year
c. 125, and it means a 25% increase in price from the base year
d. 125, and this metric means a 125% increase in price from the base year
6. If GDP deflator is 200 and the nominal GDP is 100 million, the real GDP is a. 50 million b. 20 million c. 0.5 million d. 20 billion
7. In 2013, the real GDP per capita in country A was $4,500. In 2012, the figure was $4,250. What is the
growth rate of real GDP per person? a. 5.6% b. 5.9% c. 6.5%
d. There are no correct answers
8. Which of the following factors affects productivity? a. Human capital b. Capital capital c. Natural resources
d. All of the above sentences are correct
9. In the long run, the savings rate increases
a. Unable to increase capital stock
b. That means people have to consume less in the future c. Increase productivity
d. There are no correct answers
10. Which of the following equations representing national saving in a closed economy? a. Y – I – G – NX b. Y – C – G c. Y – I – C d. G + C –Y
11. Assume that in a closed economy there is public saving of $3 billion and private savings of $2 billion.
National saving and investment in this economy are: a. $5 billion, $5 billion b. $5 billion, $2 billion c. $1 billion, $5 billion d. $1 billion, $2 billion 12. Supply of loanable funds
a. Is savings and the source of demand for loanable funds is investment
b. Is investment and the source of demand for loanable funds is savings
c. And the demand for loanable funds is savings
d. And the demand for loanable funds is investment
13. Other things held constant, when interest rates rise:
a. People will want to lend more, leading to an increase in the supply of loanable funds
b. People will want to lend less, leading to a decrease in the supply of loanable funds
c. People will want to lend more, leading to an increase in the supply of loanable funds
d. People will want to lend less, leading to a decrease in the supply of loanable funds
14. The crowding-out effect occurs when investment decreases due to
a. Budget deficit causes interest rates to increase
b. Budget deficit causes interest rates to fall
c. Budget surplus causes interest rates to rise
d. Budget surplus causes interest rates to fall
15. In a closed economy, GDP is $11 billion, consumption is $7 billion, taxes are $3 billion, and a budget
surplus is $1 billion. Private saving and national saving are: a. $4 billion and $1 billion b. $4 billion and $5 billion c. $1 billion and $2 billion d. $1 billion and $1 billion
16. The range of unemployment that varies from the natural rate is called
a. Natural rate of unemployment b. Structural unemployment c. Frictional unemployment d. Cyclical Unemployment 17. Cyclical unemployment is:
a. The relationship between the unemployment and the change in workers' experience level
b. Number of times workers have jobs in their lifetime
c. Year-to-year fluctuations of unemployment around the natural rate
d. Long-term trend in unemployment
18. Trung is a student and has no need to find a job. Trung is considered:
a. Unemployed and in the labor force
b. Unemployed but not in the labor force
c. In the labor force but not unemployed
d. Not in the labor force and not unemployed
19. Assume the adult population is 6 million, the number of employed people is 3.8 million, and the force
participation rate is 70%. What is the unemployment rate? a. 6.7% b. 9.5% c. 10.5% d. 28%
20. Which of the following statements is correct?
a. Unemployment insurance increases structural unemployment because it reduces the job search effort of the unemployed
b. Most economists doubt the value of UI because they believe it will lead to bad results in matching workers to suitable jobs.
c. Studies show that when unemployed people do not qualify for unemployment insurance, the probability
of them finding a job increases significantly d. All of the above are true
21. Which of the following is not true?
a. Frictional unemployment is the result of the matching process between workers and jobs
b. Structural unemployment results when the number of jobs is not enough for the number of workers
c. Minimum wage is the main cause of unemployment
d. When the law of minimum wages leads to wages above the equilibrium level of supply and demand, the
quantity of labor supplied increases and the quantity demanded of labor decreases relative to the equilibrium level. II. Exercise:
1. Suppose the table with the data below. The base year is 2011. Year Price Quantity X Y X Y 2011 $50 $100 30 20 2012 $40 $110 20 30 a.
Calculate nominal GDP and real GDP every year. b. Calculate economic growth. c.
Calculate inflation rate using GDP deflator.
d. Calculate inflation rate using CPI.
2. Economists in country A – a closed economy – collect the following information about the economy for a
particular year: (Unit: billion VND) Y = 10,000 C = 6000 T=1,500 G = 1,500
Economists also estimate the investment function as follows: I = 3,500 – 100r
where r is the real interest rate of the economy, expressed as a percentage.
a. Calculates private saving, government saving, national saving, investment, and the equilibrium real interest rate.
b. Suppose the government reduces its purchase of G to 1000. Calculate private saving, public saving, and national saving.
c. What is the new equilibrium interest rate in the case of b)?