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Unit 5 Review! Flashcards | StudBud
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Unit 5 Review!
Unit 5 Review!
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Test your knowledge on Unit 5 AP Macroeconomics!
Flashcards
25 cards
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Practice quiz
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Questions
25
Answers
1
Crowding out refers to the decrease in...
Private investment due to increased borrowing by the government
Employment caused by higher inflation
National output caused by higher taxes
Domestic production caused by increased imports
2
An increase in which of the following is most likely to promote economic growth?
The natural rate of unemployment
Investment tax credits
Consumption spending
Real interest rates
3
The Phillips curve shows what type of relationship between inflation and unemployment?
Similar
Positive
Inverse
casual
4
Which of the following is true about the national debt of the United States?
It is the debt owed to foreign investors
It increases when exports decrease, and decreases when exports increase
It is the accumulation of past and current budget deficits and surpluses
It increases when gross domestic product increases
5
When drawing the long run Philips Curve, you would show it by?
A horizontal line along the y axis.
An upwards sloping line
A downwards sloping line
A vertical line along the x axis
6
What government policies most likely result in long-run economic growth?
All the above
Education/training spending
Infrastructure spending
Production/Investment incentive programs
7
Economic growth occurs when?
when a nation’s population of goods and services stay the same over time.
When a nation’s input of goods and services increases over time
The economy grows no matter what
When a nation’s input of goods and services decrease
8
What can the Federal Reserve due to help prevent crowding out?
Increase reserve ratios
Decrease personal income taxes.
Selling government securities to banks
Lower the discount rate
9
An increase in the government budget deficit is most likely to result in an increase in which of the following?
The money supply
The marginal propensity to consume
Exports
The real interest rate
10
What is the purpose of the Monetary Policy?
Keep rich people from getting too rich
Contribute to economic growth and stability
Same as the Fiscal Policy
Give Congress and the political parties more control of the economy
11
Hyperinflation is typically caused by?
High tax rates that discourage work effort
A large decline in corporate profits that lead to a decrease in production
Trade surpluses that are caused by strong protectionist policies
Continuous expansion of the money supply to finance gov budget deficits
12
In the quantity theory of money, P and Y represent the price and quantity of?
All raw materials and natural resources sold in an economy
All financial services sold in an economy
Manufacturing equipment purchased in the economy
All finished goods and services sold in an economy
13
What’s the trade-off of increasing government spending without raising taxes to close a recessionary gap?
Deficit spending
Budget Balance
Budget Surplus
National Debt
14
What is not characteristic of supply-side fiscal policy?
Government policies increase production by reducing business taxes
Policy proposals are emphasized as long-run solutions to growth problems.
It is aimed at shifting the aggregate demand curve.
It focuses on incentives for people to work and produce
15
An increase in aggregate demand will cause which of the following?
The long-run Phillips curve to shift to the right
The short-run Phillips curve to shift to the left
The long-run Phillips curve to become horizontal
A movment along a given short-run Phillips curve
16
Which of the following combinations of fiscal and monetary policies will correct a severe recession?
Decreasing income tax rates and increasing the money supply?
Increasing both the income tax rates and the money supply?
Decreasing both income tax rates and the money supply?
Increasing income tax rates and decreasing the money supply?
17
If we wanted to get out of a recession with no policy what would happen?
Wages and costs will go up which will increase aggregate supply
Government will increase spending and lower taxes
We would lower the reserve requirement and discount rate and buy bonds.
Wages and costs will decrease which will increase aggregate supply
18
An increase in which of the following would be most likely to increase long-run growth?
Subsidies to businesses for purchases of capital goods
Tariffs on imported goods
Pension payments
Unemployment compensations
19
Fiscal Policy is the means by which the government keeps the economy stable through taxes and expenditures.
True
False
20
What is the formula for Quantity Theory of Money?
M x V = P x Y
M x V / P x Y
M - V + P - Y
M x Y = P x V
21
Which of the following monetary and fiscal policy mixes will reduce unemployment?
Buying government bonds in the open market and decreasing tax rates
Selling government bonds in the open market and increasing gov spending
Buying government bonds in the open market and increasing taxes
Selling government bonds in the open market and increasing taxes
22
In the quantity theory of money, V represents?
The velocity of production
The velocity of a dollar
The value of a dollar
The value of a good
23
According to the short-run Phillips curve, lower inflation rates are associated with?
Higher government spending
Higher unemployment rates
Higher inflation rates
Greater labor-force participants
24
The y axis when drawing a Philips Curve graph is labeled as the?
real output
inflation rate
unemployment rate
price level
25
What do economists use to measure economic growth and standard of living?
Real GDP
Real GDP per Capita
Growth Rate
Nominal GDP
