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Unit notes and practice questions

Grade 9 Economics unit 7: Introduction to Macroeconomics

Everything here is for unit 7 of the Grade 9 Economics textbook: what the chapter covers, the short notes, practice questions with their answers, and the lesson video where one exists.

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5
Cards
10
Practice questions on unit 7
93–104
The textbook pages for unit 7

What unit 7 covers

  1. 1.Definition of Macroeconomic Variales
  2. 2.Macroeconomic Goals
  3. 3.Macroeconomic Problems

Short notes for unit 7

The cards filed under this chapter on the Grade 9 Economics page. Open one at a time.

Inflation TypePrimary CauseKey Feature
Demand-pull inflationIncrease in aggregate demandToo much money chasing too few goods near full capacity
Cost-push inflationDecrease in aggregate supplyRising input costs, higher wages, or production setbacks

When you use it

Use this table to distinguish between inflation driven by excess aggregate demand and inflation caused by supply side cost increases.

Watch out

Demand-pull inflation arises from the demand side (too much spending), whereas cost-push inflation arises from supply side cost shocks.

Drafted from Grade 9 Economics, pages 93-104, then checked twice before it went up

GNP=GDP+NFI\text{GNP} = \text{GDP} + \text{NFI}
GNP\text{GNP}
Gross National ProductETB\text{ETB}
GDP\text{GDP}
Gross Domestic ProductETB\text{ETB}
NFI\text{NFI}
Net factor income from foreign sourcesETB\text{ETB}

When you use it

Use this formula to calculate Gross National Product by adjusting GDP with net factor income from abroad.

Watch out

NFI is negative when factor income paid to foreigners abroad exceeds factor income received from abroad, which makes GNP smaller than GDP.

Drafted from Grade 9 Economics, pages 93-104, then checked twice before it went up

When you use it

Reach for this when determining which goods and services are included in GDP calculations.

Watch out

Do not include intermediate goods in GDP calculations. Only final goods and services produced currently within national borders are counted, avoiding double counting.

Drafted from Grade 9 Economics, pages 93-104, then checked twice before it went up

Real GDP=Nominal GDPPrice Index×100\text{Real GDP} = \frac{\text{Nominal GDP}}{\text{Price Index}} \times 100
Real GDP\text{Real GDP}
Gross Domestic Product measured at constant pricesETB\text{ETB}
Nominal GDP\text{Nominal GDP}
Gross Domestic Product measured at current pricesETB\text{ETB}
Price Index\text{Price Index}
Average measure of price level changesdimensionless\text{dimensionless}

When you use it

Use this formula to remove the effect of price changes from Nominal GDP and calculate real output at constant prices.

Watch out

Always divide Nominal GDP by the Price Index first, then multiply the quotient by 100.

Drafted from Grade 9 Economics, pages 93-104, then checked twice before it went up

Unemployment TypePrimary Cause
Frictional unemploymentTemporary job transition, seasonality, or new entrants seeking employment
Structural unemploymentMismatch between worker skills or location and employer requirements
Cyclical unemploymentDeficiency in aggregate demand during economic recessions or downturns

When you use it

Use this reference table to classify different forms of unemployment based on their underlying economic cause.

Watch out

Do not confuse structural unemployment (skill mismatch) with cyclical unemployment (shortage of aggregate demand during recessions).

Drafted from Grade 9 Economics, pages 93-104, then checked twice before it went up

Practice questions on unit 7

10 multiple-choice questions written against this chapter, each with its answer and the reason. Try one before you open the answer.

Question 1

What is Gross Domestic Product (GDP)?

  1. A.The total value of all intermediate goods used in production
  2. B.The total value of currently produced final goods and services within a country boundary
  3. C.The total amount of money sent from citizens living abroad
  4. D.The value of all goods produced only by government-owned factories
Show the answer and why

Answer: B The total value of currently produced final goods and services within a country boundary

Why

GDP is defined as the total value of currently produced final goods and services that are produced within a country's boundary during a given time period, usually one year.

Question 2

In macroeconomics, what is economic growth defined as?

  1. A.A continuous rise in general price levels
  2. B.A consistent increase in national income
  3. C.An increase in imported goods from abroad
  4. D.A reduction in the total number of banks
Show the answer and why

Answer: B A consistent increase in national income

Why

According to the textbook, economic growth is defined as a consistent increase in national income over time.

Question 3

The labor force of a country includes able and willing people within which age bracket?

  1. A.10 to 45 years
  2. B.15 to 64 years
  3. C.18 to 70 years
  4. D.21 to 60 years
Show the answer and why

Answer: B 15 to 64 years

Why

The labor force includes people within the specified age bracket of 15 to 64 who are either employed or actively looking for work.

Question 4

Which term describes a sustained and persistent increase in the general price level of goods and services?

  1. A.Inflation
  2. B.Deflation
  3. C.Recession
  4. D.Depreciation
Show the answer and why

Answer: A Inflation

Why

Inflation is a situation characterized by a sustained, persistent, and appreciable increase in the general price level.

Question 5

An economy has a GDP of 600 billion birr and a Net Factor Income from Foreign Sources (NFI) of -30 billion birr. What is its Gross National Product (GNP)?

  1. A.630 billion birr
  2. B.570 billion birr
  3. C.-30 billion birr
  4. D.600 billion birr
Show the answer and why

Answer: B 570 billion birr

Why

The relationship is given by the formula GNP = GDP + NFI. Here, GNP = 600 + (-30) = 570 billion birr.

Question 6

Why is Real GDP preferred over Nominal GDP when comparing economic performance over different years?

  1. A.It excludes the effect of price changes by using constant prices
  2. B.It includes intermediate products used during production
  3. C.It measures output at current market prices
  4. D.It only measures goods produced by foreign companies
Show the answer and why

Answer: A It excludes the effect of price changes by using constant prices

Why

Real GDP measures output at constant prices and eliminates the effect of price changes (inflation or deflation), allowing true production comparisons over time.

Question 7

Which type of inflation occurs when aggregate demand rises faster than the economy's productive capacity, creating a situation where too much money chases too few goods?

  1. A.Cost-push inflation
  2. B.Demand-pull inflation
  3. C.Supply-side inflation
  4. D.Imported inflation
Show the answer and why

Answer: B Demand-pull inflation

Why

Demand-pull inflation results from an increase in aggregate demand when the economy is producing at or near full capacity, so too much money chases too few goods.

Question 8

Bekele graduated from university in Hawassa last month and is currently looking for his first job. Which type of unemployment is Bekele experiencing?

  1. A.Frictional unemployment
  2. B.Cyclical unemployment
  3. C.Structural unemployment
  4. D.Deflationary unemployment
Show the answer and why

Answer: A Frictional unemployment

Why

Frictional unemployment includes brief periods of unemployment such as a new graduate entering the labor force to find work or workers switching jobs.

Question 9

Suppose in a given year, an economy records a Nominal GDP of 400 billion birr and a Price Index of 800. What is the Real GDP of this economy?

  1. A.320 billion birr
  2. B.50 billion birr
  3. C.200 billion birr
  4. D.500 billion birr
Show the answer and why

Answer: B 50 billion birr

Why

Using the formula: Real GDP = (Nominal GDP / Price index) * 100, we get (400 / 800) * 100 = 0.5 * 100 = 50 billion birr.

Question 10

Under which condition will a nation's Gross National Product (GNP) be greater than its Gross Domestic Product (GDP)?

  1. A.When Net Factor Income from foreign sources (NFI) is greater than zero
  2. B.When Net Factor Income from foreign sources (NFI) is less than zero
  3. C.When the economy has no interaction with the rest of the world
  4. D.When the price index is equal to 100
Show the answer and why

Answer: A When Net Factor Income from foreign sources (NFI) is greater than zero

Why

Since GNP = GDP + NFI, whenever NFI > 0, it follows that GNP > GDP.

The app holds 12 questions on this unit, marked as you go. These are the first 10.

The textbook pages for unit 7

Unit 7 runs from page 93 to page 104 of the Ministry of Education edition.

Ministry of Education edition, English, 130 pages

Download the PDF

All Grade 9 Economics short notes

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