Economics Micro & Macro (CliffsAP)

17. To reach its goal of full employment in an
    economy experiencing a recession, the Fed should:
    A. Increase spending
    B. Buy open market bonds from the government
    C. Sell open market bonds
    D. Increase the reserve ratio
    E. Increase the price level

18. What best describes a recession?

A. Two consecutive quarters of increasing GDP

B. When investment is too high

C. When firms decide to hire more workers

D. Two consecutive quarters of declining GDP

E. When the stock market is not performing well

19. The spending multiplier can decrease as a result of:

A. A reduction in taxes

B. A decline in exports

C. A decline in imports

D. An increase in government spending

E. An increase in the marginal propensity to

save

20. Which of the following is part of M1?

A. Gold

B. Silver

C. Checkable deposits

D. Savings accounts

E. Large certificates of deposit

21. The value of the multiplier will decrease because:
    A. The velocity of money is increasing.
    B. Interest rates are high.
    C. Unemployment is low.
    D. The government is in a budget deficit.
    E. People are holding their money in currency.


22. Which of the following would require a restrictive
    monetary policy?
    A. High employment
    B. High inflation
    C. High unemployment
    D. Low interest rates
    E. A budget deficit


23. What is the purpose of automatic stabilizers?
    A. To reduce public spending
    B. To help balance the federal government’s
    budget
    C. To stabilize the unemployment rate
    D. To produce more jobs
    E. To reduce the inflation rate


24. Which of the following would be responsible for a
    decline in GDP?
    A. Negative net investment
    B. Introduction of new technology
    C. Deflation
    D. A decrease in the death rate of foreigners
    E. A decline in wages


25. Unexpected increases in inventories precede:
    A. Price level increases
    B. Import increases
    C. High unemployment and price levels
    D. Decreases in production
    E. A decline in unemployment


26. The short-run aggregate supply curve will decline
    when:
    A. The government increases spending.
    B. Productivity becomes more expensive.
    C. The money supply increases.
    D. The federal budget deficit increases.
    E. Imports increase.


27. Economists believe that unemployment is:
    A. Overstated
    B. Understated
    C. All cyclical
    D. All structural
    E. All seasonal


28. Which one of the following will not cause a shift
    in aggregate demand?
    A. Consumption
    B. Investment
    C. Exports
    D. Corporate income taxes
    E. Government spending

Macroeconomics Full-Length Practice Test 1

Macroeconomics Full-Length

Practice Test 1

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