A country’s gov't runs a budget deficit when which of the following occurs in a given year?

Government spending exceeds tax revenues.

A high marginal propensity to consume implies which of the following?

A low marginal propensity to save

The value of a country’s currency will tend to appreciate if

demand for the country’s exports increases

Advocates of a monetary rule recommend increasing MS at a rate equal to the rate of increase of

Long-run real gross domestic product

Hyperinflation is typically caused by

expansion of money supply to finance gov't budget deficits

All of the following changes will shift the investment demand curve to the right EXCEPT

an increase in the real interest rate

Which of the following best illustrates an improvement in a country’s standard of living?

An increase in real per capita gross domestic product

Tariffs are different from assigned import quotas in that tariffs will

generate additional revenue for the domestic government

All of the following statements about this economy shown in the graph are true EXCEPT:

X represents the most efficient production combination

Unlike a market economy, a command economy uses

more centralized planning in economic decision making

The official unemployment rate understates the actual unemployment b/c the official u-rate

ignores underemployed and discouraged workers

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AP Macro Exam Review Game #2

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Questions 18

Answers

1
A country’s gov't runs a budget deficit when which of the following occurs in a given year?
Interest payments on the nat'l debt exceed spending on g/s
Debt owed to foreigners exceeds that owed to our citizens
Government spending exceeds tax revenues.
The amt borrowed exceeds the interest payment on nat'l debt
2
A high marginal propensity to consume implies which of the following?
A high savings rate
A high marginal tax rate
A low marginal propensity to save
An equilibrium level of income near full employment
3
The value of a country’s currency will tend to appreciate if
the country’s citizens increase their travel abroad
domestic interest rates decrease
demand for the country’s exports increases
the country’s money supply increases
4
Advocates of a monetary rule recommend increasing MS at a rate equal to the rate of increase of
Long-run real gross domestic product
Unemployment rate
Level of exports
Level of imports
5
Hyperinflation is typically caused by
expansion of money supply to finance gov't budget deficits
bad harvests that lead to widespread shortages
trade surpluses that are caused by protectionist policies
high tax rates that discourage work effort
6
All of the following changes will shift the investment demand curve to the right EXCEPT
an increase in corporate profits
an increase in the real interest rate
a decrease in the corporate income tax rate
an increase in the productivity of new capital goods
7
Which of the following best illustrates an improvement in a country’s standard of living?
An increase in real per capita gross domestic product
Price stability
A balanced budget
An increase in nominal per capita gross domestic product
8
In the narrowest definition of money, M1, savings accounts are excluded because they are
not a medium of exchange
a store of purchasing power
available from financial institutions other than banks
not insured by federal deposit insurance
9
Which of the following combinations of changes in gov't spending and taxes is expansionary?
Decrease G, No change in T
Increase G, Increase T
Decrease G, Increase T
Increase G, Decrease T
10
An increase in which of the following would LEAST likely increase labor productivity?
The labor force
Human capital
Technological improvements
Educational achievement
11
Tariffs are different from assigned import quotas in that tariffs will
generate additional revenue for the domestic government
increase the price of imported goods
hurt domestic producers of goods facing import competition
benefit domestic consumers of imported goods
12
All of the following statements about this economy shown in the graph are true EXCEPT:
Resources are fully utilized at points W and X.
The combination represented by point Y is unattainable
X represents the most efficient production combination
Point X will mean more economic growth than producing at W
13
Unlike a market economy, a command economy uses
more centralized planning in economic decision making
its resources more efficiently
price signals in economic decision making
consumer sovereignty to make production decisions
14
Answer the following question
$10,000
$4,000
$8,000
$9,000
15
Which sets of inflation & u-rates will the Fed be most reluctant to increase the money supply?
10% unemployment, 2% inflation
5% unemployment, 5% inflation
5% unemployment, 10% inflation
10% unemployment, 10% inflation
16
The transaction demand for money is very closely associated with money’s use as a
standard of value
store of value
medium of exchange
unit of account
17
Based on the figures in the table, what is the value of GDP, in billions of dollars?
$4,900
$4,700
$5,150
$4,500
18
The official unemployment rate understates the actual unemployment b/c the official u-rate
ignores the duration of unemployment
excludes all unemployed teenagers
includes jobs created by the underground economy
ignores underemployed and discouraged workers

AP Macro Exam Review Game #2 Flashcards | StudBud