Suppose that in January 2014 in your country 200 million peo

Suppose that in January 2014 in your country, 200 million people are working are not working but are looking for work, and million are not working and have given up looking for work. The official unemployment rate for that month is:

Solution

1. c) 10% (20/200)

2. d) 4 (1divided by 1-0.75 = 1 divided by 0.25 = 4)

3. b. A reduction in GDP because one man\'s expenditure is another man\'s income. If one man does not spend and rather saves, it will lead to decrease in another man\'s income and chain will act as multiplier leading to fall in GDP.

4. b. A central bank purchase of bonds and reduction in rate of interest. With purchase of bonds, more cash will flow in hands of general public and with reduction in interest rate cost fo credit will reduce.

5. d. None of the above as all mentioned in a b c will lead ot increase in money supply not decrease.