Question

1. In macroeconomics, which of the following topics would most likely be studied?

a. Bob's budget

b. Nike's costs of production

c. The growth rate of the oil industry

d. Unemployment in Mexico

2. The GDP deflator:

a. measures price changes for everything produced in the country.

b. may include goods produced abroad.

c. is computed using the quantities that are consumed in the economy each year.

d. is the same as PPI.

3. The labor supply curve:

a. is made up of firms who want to hire workers at each given wage.

b. is made up of workers who want to work for firms at each given wage.

c. shows number of firms who are willing and able to hire workers at each given wage.

d. shows that the number of firms who want to hire workers decreases as the wage increases.

Answer 1

Question 1

Option D is correct - Unemployment in Mexico

Macroeconomics is the study of the economy as a whole and therefore it covers topics like the growth rate of the country, inflation rates, unemployment level, etc. On the other hand, Microeconomics is the study of decisions of an individual, consumer, producer, or a firm. Therefore the topic of unemployment in Mexico will be covered in Macroeconomics.

Question 2

Option A is correct - measures price change for everything produced in the country

The GDP deflator is given by the following formula:

GDP deflator = Nominal GDP / Real GDP *100

We know that nominal GDP does not inflation rates or price change into account but the real GDP does. Therefore GDP deflator measures the price change for everything produced in the country (as can be seen in the formula).

Question 3

Option B is correct - is made up of workers who want to work for firms at each given wage

We know that the supply of labor consists of workers who want to work for firms. This is because the supply side of labors represents the laborers or the workers that are willing to work. The price of labor is the wage rate, or the workers get the wages in return for the work done by them. Thus, the supply of labor varies directly with the wage rate. As the wages increase, the willingness to work more increases and so does the labor supply.