Economics Micro & Macro (CliffsAP)

Macroeconomics Full-Length Practice Test 1

Section I

■ 60 multiple choice questions 70 minutes

Section II

■ 1 long free-response question and

■ 2 short free-response questions 10 minutes for planning

50 minutes for writing

Total Time: 2 Hours and 10 Minutes

Macroeconomics Section I: Multiple-Choice Questions

Directions: You have 70 minutes to complete the 60 multiple-choice questions in this section of the exam.

1. Circular flow models:
   A. Illustrate firms as the buyers in a product
   market
   B. Illustrate firms as the sellers in a factor
   market
   C. Are only used by business owners
   D. Show no government involvement
   E. Illustrate firms as the suppliers in a product
   market


2. Which one of the following statements is true
   regarding classical economists?
   A. The market needs government intervention.
   B. The government does not need to intervene
   in every situation and should do so only
   when the economy is in trouble.
   C. The market is not self-correcting.
   D. The market is self-correcting.
   E. None of the above.


3. What will an increase in corporate taxes do to
   aggregate supply?
   A. Increase it.
   B. Decrease it.
   C. Have no impact.
   D. Increase only if firms pay taxes.
   E. Have no impact if aggregate demand
   decreases.


4. Which of the following increases the nation’s GDP?
   A. Mr. Lane purchases a share of stock in an
   automobile company.
   B. A clothing storeowner increases her stock of
   clothing.
   C. The government increases its domestic
   purchases of clothing for the military.
   D. A soda company sells its soda from last
   year’s inventory.
   E. A father sells his water skis to his son.


5. Which of the following is likely to occur to an
   economy when it is experiencing a shortage of
   goods?
   A. The amount of investment spending by firms
   and the government increases.
   B. Interest rates increase.
   C. Interest rates decrease.
   D. The demand for money increases.
   E. The demand for money decreases.


6. Inflationary gaps can be covered by:
   A. A decrease in personal income taxes
   B. An increase in the money supply
   C. An increase in spending
   D. An increase in personal income taxes
   E. An increase in the minimum wage