- According to Keynesians, expansionary monetary
policy means:
A. Lower interest rates and more investment
B. Lower prices
C. Higher prices
D. Higher real income and higher interest rates
E. No change in the economy - In what way can the Federal Reserve increase the
money supply?
A. Selling gold to banks
B. Selling bonds to firms
C. Buying international bonds
D. Buying gold from foreign countries
E. Buying government bonds on the open market - If a bank receives a deposit of $400 and its excess
reserves increased by $350, what is the reserve
requirement?
A. 13 percent
B. 10 percent
C. 5 percent
D. 25 percent
E. 2 percent
10. According to Keynesians, what happens to savings
when aggregate income increases?
A. Savings increase by less than the amount of
the increase in income.
B. Savings decrease by less than the amount of
the increase in income.
C. There is no change in savings.
D. Savings exceed the amount of the increase in
income.
E. None of the above.- Which of the following is true when the demand
for holding money increases because of an
expectation of increased interest rates?
A. Individuals are holding money for
transactions.
B. Individuals are holding money for exchange.
C. Individuals are holding money for liquidity.
D. Individuals are holding money for
speculation.
E. Individuals are holding money for
emergencies.
12. If the federal government is currently experiencing
a budget deficit, which of the following is likely to
occur?
A. Interest rates will fall.
B. Investment will decline.
C. Taxes will decrease.
D. The nation’s debt will rise.
E. State governments will cover the national
government’s spending gap.13. An increase in Italy’s demand for U.S. goods will
cause the U.S. dollar to:
A. Depreciate because of inflationary
expectations
B. Depreciate because of Italy’s demand
C. Appreciate because Italy would be buying
more U.S. dollars
D. Appreciate because Italy would be selling
more U.S. dollars
E. None of the above14. Contractionary supply shocks produce:
A. Increases in aggregate demand
B. GDP increases
C. Net national product increases
D. Deflation
E. An increase in unemployment15. If nominal GDP is increasing and real GDP is
decreasing, which of the following could be the
reason?
A. A rising unemployment level
B. Inflation
C. Imports that are less than exports
D. A period of economic contraction
E. Government deficits16. Why is the official unemployment rate not an
accurate assessment of unemployment?
A. Because government spending is not taken
into account.
B. Full employment is greater than the natural
employment rate.
C. Structural employment never exists.
D. Discouraged workers are not accounted for.
E. None of the above.Part IV: AP Macroeconomics & Microeconomics Tests