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Activity questions
1. In year 1, nominal GDP is $500 billion, and in year 2 it is $600 billion. Meanwhile,
the value of the GDP deflator has risen from 100 to 120. In this case:
a) Real GDP has risen by 20%.
b) Real GDP has fallen by 20%.
c) Real GDP has stayed the same.
d) Real GDP has risen more quickly than nominal GDP.
2. Why isn’t the natural rate of unemployment equal to zero?
a) Both c and d answers.
b) Because not all people want to work.
c) Because frictional unemployment always exists.
d) There is long term structural unemployment to meet structural changes
in economy.
3. Jimmy is a tour bus guide who loses his job during the autumn months. What type of
unemployment is he experiencing?
a) Structural unemployment
b) Frictional Unemployment
c) Seasonal Unemployment
d) Cyclical Unemployment
4. The real interest rate is calculated by:
a) deducting the nominal interest rate from the inflation rate.
b) deducting the inflation rate from the nominal interest rate.
c) adding the inflation rate and the nominal interest rate.
d) dividing the nominal interest rate by the inflation rate, expressed as a
decimal.
5. Which of the following groups is included in Canada's labour force population?
a) College and university students
b) Children under the age of 15
c) full-time members of the armed forces
d) people living on first nations reserves
6. When the actual inflation rate is lower than expected,
a) Borrowers win and lenders lose, because the real interest rate is less
than expected.
b) Borrowers win and lenders lose, because the real interest rate is greater
than expected.
c) Lenders win and borrowers lose, because the real interest rate is less
than expected.
d) Lenders win and borrowers lose, because the real interest rate is
greater than expected.
7. A country has 1 million employed workers and 250,000 workers who are unemployed
and actively seeking work. The official unemployment rate is therefore:
a) 25%
b) 2.5%
c) 20%
d) 2%
8. Is full employment the same as zero unemployment?
a) Yes, because full employment means that everyone is employed.
b) No, because full employment means everyone who can work is working.
c) No, because full employment includes frictional unemployment.
d) Both b and c answers.
9. Lenders lose/win from inflation if inflation is higher than they anticipated with the
inflation premium.
10. Which type of unemployment persists for the longest period?
a) Frictional Unemployment
b) Structural unemployment
c) Seasonal Unemployment
d) Cyclical Unemployment