A major advantage of automatic stabilizers in fiscal policy is that they

go into effect without the passage of new legislation

Crowding out is best described by which of the following?

decrease in inv. spend. or consumption due to gov. borrowing

If at full employment the gov. wants to increase spending by $100 mil. without extra inflation

lower taxes by less than 100 million

Which of the following arguments is typically associated with classical economists?

A market economy is self-correcting, needs no intervention

The intersection of aggregate demand and aggregate supply occurs at the intersection of

real national output and price level

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Macroeconomics AP practice review

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Questions 27

Answers

1
A major advantage of automatic stabilizers in fiscal policy is that they
go into effect without the passage of new legislation
reduce the public debt
increase the possibility of a balanced budget
stabilize the unemployment rate
2
Crowding out is best described by which of the following?
the decrease in output caused by an increase in taxes
increase in capital outflow caused by extra gov. spending
decrease in gov. spending caused by decrease in taxes
decrease in inv. spend. or consumption due to gov. borrowing
3
A decrease in labor productivity would have what effect on real GDP?
?
increase
no effect
decrease
4
Question 57
A
E
C
B
5
Question 51
E
C
B
D
6
The aggregate demand curve is likely to shift to the left when there is an increase in
government spending
the cost of productive resources
the productivity level
taxes
7
If at full employment the gov. wants to increase spending by $100 mil. without extra inflation
it should raise taxes by more than 100 million
lower taxes by more than 100 million
lower taxes by less than 100 million
raise taxes by less than 100 million
8
Question 58
B
E
C
D
9
Question 55
D
B
E
C
10
Question 46
C
D
A
E
11
Question 56
C
D
A
E
12
Which of the following arguments is typically associated with classical economists?
A market economy has stable prices and low inflation
A market economy eventually results in monopolies
A market economy is self-correcting, needs no intervention
A market economy only needs a little intervention
13
question 50
A
D
C
B
14
Question 54
D
A
E
C
15
Question 47
A
E
D
C
16
Question 45
E
D
C
B
17
Question 44
E
D
A
B
18
The spending multiplier increases when
tax rates are reduced
the MPS increases
exports decline
the MPS decreases
19
Under which of the following would consumer spending be expected to decrease?
consumers wealth is increased by changes in the stock market
interest rates fall
housing values fall
tax rates fall
20
Question 52
B
D
E
C
21
The intersection of aggregate demand and aggregate supply occurs at the intersection of
real disposable income and unemployment
unemployment and inflation
real investment and real interest rate
real national output and price level
22
Question 59
C
A
E
D
23
A contractionary supply shock would most likely result in
a) An increase in aggregate demand
A decrease in employment
An increase in national income
A decrease in the general price level
24
Question 60
B
A
D
E
25
Question 48
C
A
B
E
26
Question 53
A
D
C
E
27
Question 49
A
B
C
E

Macroeconomics AP practice review Flashcards | StudBud