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AP MACRO review
AP MACRO review
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round 1 AP macro review MC questions
Flashcards
33 cards
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Practice quiz
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Questions
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Answers
1
The "natural rate of unemployment" is defined as the unemployment rate when
frictional unemployment is zero
seasonal unemployment is zero
cyclical unemployment is zero
structural unemployment is zero
2
A period of simultaneously high rates of unemployment and inflation are called
Stagflation
Deflation
Slow Growth
Superflation
3
Monetarists explain the power of monetary policy using the equation
money supply (x) velocity of money= gross domestic product
marginal prosperity to save = multiplier
reserve requiremnt = gross domestic product
Marginal cost = marginal revenue
4
which of the following is not regarded as trade barriers?
tariffs
voluntary export restrictions
quotas
General Agreement on tariffs and trade ( GATT)
5
Which of the following would lead to increase in real gross domestic product over time?
increase in taxes
increase in government spending
increase in the size of labor force
decrease in government spending
6
Based on the Data in the table, what is the labor force participation rate
60%
80%
20%
100%
7
Commodity money would best be exemplified in
credit cards
debit cards
checkable accounts
gold coins
8
Raising interest rates have a tendency to limit growth because
investment will decrease
capital is over consumed
consumers will spend more
investment will increase
9
All of the following are included in the M1 definition of the money supply EXCEPT
currency
demand deposit
checkable accounts
credit cards
10
Ad advocate of a supply side fiscal policy would argue for
deficit budgets to increase aggregate supply
gov. spending increases to spur savings and investment
tax cuts to supper saving and investment
tax increase to spur saving and investment
11
The demand of money is comprised of
asset demand, transaction demand and loanable funds
asset demand only
asset and transaction demand
transaction demand only
12
Economic analysis involves the use of all the following EXCEPT
hypoptheses
principles and generalizations
marginal analysis
value judgments
13
what fiscal policy measure would be appropriate to decrease inflation?
increase deficit spending
increase government spending
increase taxes
increase the money supply
14
Which of the following would be considered leakages and injections respectively?
Investment, saving
Taxes, saving
Saving, taxes
Saving, investment
15
the most frequently used tool of monetary policy is
change in taxes
change in the reserve requirement
open market operations
changes in government spending
16
If a $500 deposit in a bank leads to a $2,000 increase in them money supply, the reserve is
2000%
10%
25%
500%
17
a recession gap could be eliminated by an increase in
the budget surplus
taxes
government spending
the discount rate
18
Rising interest rates have a tendency to limit growth because
Investment will decrease
consumers will spend more
capital is over consumed
investment will increase
19
With an annual rate of inflation of 7%, how many years would it take for prices to double?
7
10
20
15
20
When the federal reserve engages in open market operations they are buying or selling
stocks
money
commercial bonds
government bonds
21
Money definitions would include all of the following components EXCEPT
measure of value
standard of value
all of the above
backed by gold
22
A series of Natural disasters like fires, floods, earthquakes, in the short run could cause
none of the above
demand shock and inflation
supply shock and deflation
supply shock and inflation
23
Which of the following is not a type of unemployment?
Nominal
Structural
frictional
cyclical
24
In the circular low diagram, which of the following is true in the product market
businesses sell resources to households
households sell goods and services to firms
households sell resources to buisnesses
business firms sell goods ans services to households
25
If actual inflation exceeds anticipated inflation, then the real wages will
fall
be as likely to rise or fall
remain unchanged
rise
26
The conscious decision to hold more cash for transactions purposes would contribute to a(n)
interest rates not affected
increase in interest rates
increase in imports
decrease in interest rates
27
The effect on interest rates of expansionary fiscal and monetary policy, respectively, are
increase, increase
increase, decrease
decrease, constant
decrease, increase
28
banks make money when they
hold cash in their vaults
sell government securities to federal reserve
collect existing taxes
make loans
29
Measures of Gross Domestic product include...
The purchase of a new car
All of the above
the purchase of an excising house
the purchase of common stock
30
Net domestic product is less than gross domestic products by an amount equal to
interest
depreciation
income taxes
inflation
31
national debt and budget deficit would respectively be referred to by economists
a stock and flow
both are flows
both are stocks
a flow and stock
32
Which of the following would not increase aggregate demand?
An increase in consumer confidence
A decrease in taxes
An increase in excess capacity ( used capital)
An increase in taxes
33
Gresham's law states that
good money drives bad money out of circulation
more goods chase fewer dollars
more dollars chase fewer goods
bad money drives good money out of circulation
