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# Question about Real GDP

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Suppose nominal GDP in 1999 was \$200 billion, and in 2001, it was \$270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.) Refer to the data in the above Scenario. What is the size of the labor force in the United States for the given year?

(b2.) Refer to the data in the above Scenario. What is the unemployment rate in the United States for the given year?

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#### Solution Preview

Suppose nominal GDP in 1999 was \$200 billion, and in 2001, it was \$270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

Real GDP= Nominal GDP/Price index*100

Real GDP in 1999= 200

Real GDP in 2001= 270/150*100
=180

Real GDP ...

#### Solution Summary

This posting clearly identifies real GDP by displaying all calculations.

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## Answers and explanations for common multiple-choice Macroeconomics test questions.

Question #1
What is the short term economic outcome if price levels in the US increase and consumers buy less output as a result?
1. Aggregate demand shifts to the right.
2. Aggregate demand shifts to the left.
3. Aggregate demand does not shift, movement along this curve.

2. Question #2
Suppose that the real wealth of households increases significantly. As a result, the short term impact is that
1. Aggregate demand shifts to the right.
2. Aggregate demand shifts to the left
3. Aggregate demand does not shift, instead there is a movement along this curve.

3. Question #3
When expectations for corporate profits are diminished, economists expect that in the short term
1. Aggregate demand shifts to the right.
2. Aggregate demand shifts to the left.
3. Aggregate demand does not shift, instead there is a movement along this curve.

4. Question #4
If a series of tornados damages factories and infrastructure in the industrial regions of the US, a short term consequence is that
1. Aggregate supply shifts to the right.
2. Aggregate supply shifts to the left.
3. Aggregate supply does not shift, instead there is a movement along this curve.

5. Question #5
If companies invest in more efficient machinery and equipment, then
1. Aggregate supply shifts to the right for the short term.
2. Aggregate supply shifts to the left for the short term.
3. Aggregate supply does not shift, instead there is movement along this curve in the short term.

6. Question #6
If the Environmental Protection Agency significantly relaxes (reduces) environmental regulations, then one short term outcome is that
1. Aggregate supply shifts to the right.
2. Aggregate supply shifts to the left
3. Aggregate supply does not shift, instead there is a movement along this curve.

7. Question #7
In an effort to reduce budget deficits, the federal government decides to reduce its spending. The reduction is likely to impact both real GDP and the aggregate price level in the THE SHORT TERM. In fact:
1. Real GDP increases and the price level decreases.
2. Real GDP decreases and the price level decreases.
3. Real GDP increases and the price level increases
4. Real GDP decreases and the price level increases.

8. Question #8
Suppose that potential shareholders anticipate an increase in profitability so that there is a sharp increase in stock prices. In the short term,
1. Real GDP increases and the price level decreases.
2. Real GDP decreases and the price level decreases.
3. Real GDP increases and the price level increases.
4. Real GDP decreases and the price level increases.

9. Question #9
A widespread technological advance occurs so that the industrial sector of the economy becomes more efficient. In the short run:
1. Real GDP increases and the price level decreases.
2. Real GDP decreases and the price level decreases.
3. Real GDP increases and the price level increases.
4. Real GDP decreases and the price level increases.

10. Question #10
Remarkably, the price of an important raw material decreases. The price change leads to a short term
1. Increases in real GDP and the price level decreases.
2. Decreases in real GDP and the price level decreases.
3. Increases in real GDP and the price level increases.
4. Decreases in real GDP and the price level increases.

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