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The Intermediate Macro Economics – I (ECON 008) Course for BA (Hons) Economics Semester III, UGCF 2025, Delhi University has been taught by Mr. Dheeraj Suri. The Video Lectures are based upon the books prescribed by the University of Delhi. The Duration of Video Lectures is approximately 50 Hours.

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Labour Test #1

1. Please Read the Questions and all the options Carefully, Before Selecting Your Choice.
2. You are not Allowed to edit your answers after submission.
3. The Paper has Fifteen Questions
4. Time Allowed is 15 Minutes.
5. It is necessary to enter your valid Email id to attempt this test.

 

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1 / 15

When unemployment rate is high, most workers are typically getting their reservation wage.

True

False

2 / 15

Suppose that the firms markup over costs is 5%, and the wage setting equation is W = P(1 – u), where u is the unemployment rate.

What is the natural rate of unemployment?

1.05

0.952

0.048

Can't be determined

3 / 15

Who can be considered as unemployed

someone who doesn't have a job

a person who doesn't have a job but is actively searching a job

full time students

retired persons

4 / 15

Workers are worse off during high Unemployment because it

Increases the probability of workers losing their jobs

Reduces the probability of the unemployed finding a job

Increases the duration of unemployment

All of the above

5 / 15

The natural rate of unemployment is unaffected by policy changes.

True

False

6 / 15

Consider the wage-setting and price-setting equations we studied in class. Suppose the markup, µ, equals 0.25, and F(u, z) = 1 - u. What is the natural rate of unemployment in this economy?

0.024

0

0.25

0.1

7 / 15

Which of the following are not counted in the labour force

retired

full time students

discouraged worker

All of the above

8 / 15

The unemployment rate tends to be high in recessions, low in expansions.

True

False

9 / 15

The average duration of unemployment is

the time period during which one person is unemployed

the time period during which all persons are unemployed

the time period during which an average person is unemployed

the inverse of the proportion of unemployed leaving unemployment each month

10 / 15

Powerful labor unions will decrease the natural rate of unemployment.

True

False

11 / 15

It may be in the best interest of employers to pay wages higher than their  workers reservation wage.

True

False

12 / 15

Workers who do not belong to unions have no bargaining power.

True

False

13 / 15

Wages are usually below the reservation wage in Europe because the unemployment rate in Europe is so high.

True

False

14 / 15

The natural rate of unemployment is likely to rise if:

Unemployment benefits increase

Income tax increases

More training is available for the unemployed

Geographical immobility increases

15 / 15

Suppose that the firms markup over costs is 5%, and the wage setting equation is W = P(1 – u), where u is the unemployment rate.

What is the real wage as determined by the price setting equation?

1.05

0.952

0.9

Can't be determined

Your score is

The average score is 64%

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Labour Test #2

1. Please Read the Questions and all the options Carefully, Before Selecting Your Choice.
2. You are not Allowed to edit your answers after submission.
3. The Paper has Fifteen Questions
4. Time Allowed is 15 Minutes.
5. It is necessary to enter your valid Email id to attempt this test.

 

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1 / 15

What is a reason for the decline in labor force participation among older workers?

Poor health

Lack of latest skills

Retirement benefits

All of the above

2 / 15

The term "underemployment" refers to:

The condition when people are working fewer hours than they desire.

The condition when people are overqualified for their jobs.

Both A and B.

None of the above.

3 / 15

Structural unemployment occurs when:

There is a mismatch between workers' skills and the skills needed for available jobs.

There are temporary layoffs due to seasonal changes.

Individuals voluntarily leave their jobs to look for other employment.

There is a general decline in economic activity.

4 / 15

Generally which of the following group has the highest labor force participation rate?

Men (24 to 55 Years)

Women

Youth (15-24)

Older workers (65+)

5 / 15

Which of the following best describes the wage-setting relation?

The relationship between the wage level and the price level.

The relationship between wages and the unemployment rate.

The process by which firms determine the prices of their goods.

The process by which the government sets minimum wage standards.

6 / 15

Which of the following is NOT included in the labour force?

Unemployed individuals actively seeking work.

Full-time students not seeking employment.

Part-time workers

Individuals working multiple jobs

7 / 15

What is the labor force participation rate?

The number of employed people divided by the total population

The number of unemployed people divided by the labor force

The number of people in the labor force divided by the working-age population

The number of people not in the labor force divided by the working-age population

8 / 15

Which of the following measures the percentage of the labour force that is unemployed? 

Employment rate

Labor force participation rate

Unemployment rate

Workforce engagement rate

9 / 15

What is frictional unemployment?

Unemployment caused by economic downturns

Unemployment that results when people take time to find a job

Unemployment due to technological changes

Unemployment caused by changes in consumer demand

10 / 15

In the context of wage setting, what is the "reservation wage"?

The minimum wage set by law.

The lowest wage a worker is willing to accept.

The average wage in an industry.

The highest wage an employer is willing to pay.

11 / 15

Which of the following event increases natural rate of unemployment?

Decrease in Government Spending

Increase in Real Money Supply

Decrease in competition amongst firms

Weakening of Labour Union

12 / 15

What is cyclical unemployment?

Unemployment caused by seasonal variations

Unemployment that occurs during fluctuations in the business cycle

Unemployment resulting from technological advancements

Unemployment due to workers transitioning between jobs

13 / 15

What is the labour force participation rate?

The percentage of the total population that is employed.

The percentage of the working-age population that is either employed or actively seeking employment.

The total number of people employed.

The total number of people unemployed.

14 / 15

The natural rate of unemployment depends on all of the following except : 

The level of unemployment insurance

The markup

The bargaining power of workers with firms

Money Supply

15 / 15

Which of the following groups is typically excluded from the official labour force statistics?

Retirees

Part-time workers seeking full-time employment

Unemployed individuals actively looking for work

Self-employed individuals

Your score is

The average score is 73%

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Labour Test #3

1. Please Read the Questions and all the options Carefully, Before Selecting Your Choice.
2. You are not Allowed to edit your answers after submission.
3. The Paper has Fifteen Questions
4. Time Allowed is 15 Minutes.
5. It is necessary to enter your valid Email id to attempt this test.

 

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1 / 15

The labor force participation rate can be used to:

(A) Measure the overall health of the economy.

(B) Assess the potential for economic growth.

(C) Evaluate the effectiveness of labor market policies.

(D) All of the above.

2 / 15

Which of the following is NOT a challenge to measuring the labor force participation rate?

(A) Defining who is considered "employed."

(B) Accounting for discouraged workers.

(C) Measuring the underground economy.

(D) Calculating the GDP accurately.

3 / 15

Which of the following factors can influence the labor participation rate?

(A) Demographic changes (e.g., aging population)

(B) Economic conditions (e.g., recessions, booms)

(C) Government policies (e.g., unemployment benefits, childcare subsidies)

(D) All of the above

4 / 15

The hidden unemployment rate is:

(A) The number of people unemployed divided by the labor force.

(B) The number of discouraged workers who have stopped looking for jobs.

(C) The number of people employed part-time but wanting full-time work.

(D) The number of people working in the underground economy.

5 / 15

An increase in the labor participation rate indicates:

(A) A higher unemployment rate.

(B) A lower unemployment rate.

(C) An increase in the size of the labor force relative to the working-age population.

(D) A decrease in the size of the labor force relative to the working-age population.

6 / 15

Which of the following is NOT a determinant of labor force participation?

(A) Wage rates

(B) Population growth

(C) Interest rates

(D) Labor market regulations

7 / 15

What is the labor participation rate?

(A) The percentage of the population employed.

(B) The percentage of the population unemployed.

(C) The percentage of the working-age population in the labor force.

(D) The ratio of employed to unemployed workers.

8 / 15

Which of the following groups typically has a lower labor participation rate?

(A) Prime-age males

(B) College students

(C) Retirees

(D) Recent immigrants

(E) Both (b) and (c)

9 / 15

A recession is likely to cause:

(A) An increase in the labor participation rate.

(B) A decrease in the labor participation rate.

(C) No change in the labor participation rate.

(D) An increase in the labor participation rate initially, followed by a decrease.

10 / 15

A country with a high youth unemployment rate is likely to have:

(A) A high labor force participation rate among young people.

(B) A low labor force participation rate among young people.

(C) No relationship between youth unemployment and labor force participation.

(D) It depends on the definition of "youth."

11 / 15

Government policies aimed at providing childcare subsidies are likely to:

(A) Increase the labor participation rate of women.

(B) Decrease the labor participation rate of women.

(C) Have no impact on the labor participation rate.

(D) Increase the labor participation rate of men.

12 / 15

A country with a high labor force participation rate is likely to have:

(A) A low GDP per capita.

(B) A high GDP per capita.

(C) No correlation between labor force participation and GDP per capita.

(D) It depends on the quality of the labor force.

13 / 15

An aging population is likely to cause:

(A) An increase in the labor participation rate.

(B) A decrease in the labor participation rate.

(C) No change in the labor participation rate.

(D) An increase in the labor participation rate initially, followed by a decrease.

14 / 15

Which of the following policies is likely to increase the labor force participation rate?

(A) Increasing taxes on earned income.

(B) Reducing unemployment benefits.

(C) Strengthening labor unions.

(D) Imposing stricter immigration policies.

15 / 15

Who is considered part of the labor force?

(A) Employed and unemployed individuals actively seeking work.

(B) All adults aged 16 and over.

(C) Only those with full-time jobs.

(D) Employed individuals only.

Your score is

The average score is 70%

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Exam Pattern

Unit – II : Philips Curve and Theory of Expectations

Unit – III : Micro Economic Foundations of Macroeconomic Behaviours

Solutions of Previous Year Papers

Syllabus for Intermediate Macro Economics – I as Prescribed by University of Delhi

DISCIPLINE SPECIFIC CORE COURSE -8 (DSC-8) : Intermediate Macroeconomics – I (Foundations of Aggregate Income Determination)

Course Description

Learning Objectives

The Learning Objectives of this course are as follows:

• This course builds upon the basic concepts of macroeconomics. It introduces labour markets and
  the aggregate supply (AS) curve.
• Aggregate Demand (AD) and Aggregate Supply (AS) are brought together to determine equilibrium
  prices and output examine the policy impacts.
• The course discusses Phillips curve and the alleged trade-off between inflation and unemployment.
  Both adaptive and rational expectations are introduced.
• A flavour of micro-foundations is introduced with respect to consumption and investment.

Learning Outcomes

The Learning outcomes of this course are as follows:

This course enables students to analyse the interaction of aggregate demand and supply and the effects of fiscal and monetary policy, trade-off between inflation and unemployment, and consumption and investment behaviour of the households.

Syllabus

UNIT I: Short-run and medium-run equilibrium (15 hours)
The labour market, Wage determination; wages, prices, and unemployment; natural rate of unemployment; from employment to output, Derivation of aggregate supply curve, Interaction of aggregate demand and supply to determine equilibrium output, price level and employment.
UNIT II: Philips Curve and Theory of Expectations (15 hours)
Inflation, unemployment and expectations, Phillips Curve; adaptive and rational expectations; policy ineffectiveness debate.
UNIT III: Microeconomic foundations of macroeconomic behaviours (15 hours)
Consumption: Keynesian consumption function; Fisher’s theory of optimal intertemporal choice; life-cycle and permanent income hypotheses; other theories of consumption expenditure. Investment: determinants of business fixed investment; residential investment and inventory investment.

Recommended readings

• Blanchard, O. (2006). Macroeconomics, 4th ed. Pearson Education.
• C.L.F. Attfield, D. Demery and N.W. Duck (1991). Rational Expectations in
  Macroeconomics: an introduction to theory and evidence2nd Ed.
• Sheffrin, Steve (1996). Rational Expectations. 2nd ed., Cambridge University Press.
• Dornbusch, R., Fischer, S. (1994). Macroeconomics, 6th ed., McGraw-Hill.
• Branson, W. (2013). Macroeconomics:Theory and policy, 3rd ed,EastWestPress.
• Carlin, W and D Soskice (2007), Macroeconomics: Imperfections, Institutions and Policies, Indian
  Edition, OUP.

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