Recent trends of national income, general price level and unemployment in Hong Kong: Practice Questions

In the calculation of the unemployment rate in Hong Kong, which of the following individuals would be classified as part of the labour force?

If the growth rate of nominal GDP in Hong Kong is \( 3\% \) and the inflation rate (measured by the GDP deflator) is \( 5\% \), then the real GDP has _________.

Hong Kong is a highly open economy that imports a substantial proportion of its consumer goods and production inputs. Suppose the Hong Kong dollar experiences a significant and sustained appreciation against its major trading partners' currencies. If domestic wages and productivity remain relatively stable, which of the following is the most likely immediate and sustained impact on Hong Kong's general price level, as measured by the Consumer Price Index (CPI), and its trade balance?

A continuous decrease in the general price level in Hong Kong is known as _________.

When comparing the Consumer Price Index (CPI) and the GDP deflator as measures of the general price level in Hong Kong, which of the following statements is correct?

Suppose the nominal GDP of Hong Kong increased by \( 5\% \) in a year, while the real GDP increased by \( 2\% \) during the same period. Determine whether Hong Kong experienced inflation or deflation and calculate the approximate change in the general price level.

In recent years, Hong Kong has experienced sustained moderate real GDP growth and a stable general price level, while its unemployment rate has remained relatively high. What does this combination of trends suggest about the state of Hong Kong's economy, specifically regarding its actual and potential output?

Analyse one underlying economic factor that could explain Hong Kong's recent trend of moderate real Gross Domestic Product (GDP) growth and a stable general price level, while concurrently experiencing a stubbornly high unemployment rate.

In a given period, Hong Kong's Consumer Price Index (CPI) rose by \( 4\% \), while the implicit price deflator of GDP rose by only \( 1.5\% \).

(a) State two differences between the CPI and the GDP deflator in terms of their coverage. (2 points)
(b) Suggest one reason why the CPI might have increased significantly more than the GDP deflator in the context of Hong Kong's status as a highly open economy. (2 points)

The following table shows the economic data for Hong Kong in two consecutive years:

Year 1:
Real GDP: \(2,500\) billion HKD
CPI: \(105\)
Labour Force: \(3.80\) million
Number of Unemployed: \(0.15\) million

Year 2:
Real GDP: \(2,600\) billion HKD
CPI: \(110.25\)
Labour Force: \(3.90\) million
Number of Unemployed: \(0.20\) million

(a) Calculate the inflation rate in Year 2. (2 points)
(b) Calculate the growth rate of real GDP in Year 2. (1 point)
(c) Calculate the unemployment rate for both years. Based on your calculation, describe the trend of unemployment in Hong Kong between Year 1 and Year 2. (2 points)