- Which of the following is true if a country is
operating its resources inside the production
possibilities curve?
A. It has a market economy.
B. It has a centrally planned economy.
C. It is in the early stages of industrial
development.
D. It is underutilizing its resources.
E. It is using its resources efficiently. - What type of policy is most likely to encourage
long-run economic growth?
A. A reduction in government spending
B. An increase in taxes
C. An increase in tariffs
D. An increase in government spending
E. Both A and C - Which of the following is a tool of monetary
policy?
A. Adjusting interest rates
B. Adjusting savings rates
C. Selling securities
D. Adjusting taxes
E. None of the above - The sum of which of the following expenditures is
equal to GDP?
A. Consumption, unemployment transfer
payments, and taxes
B. Government spending, consumption
spending, investment, and taxes
C. Consumption spending, interest rates, taxes,
and exports
D. Exports/imports, consumption spending,
government spending, and investment
E. Exports and imports, consumption spending,
government spending, and inflationary
spending - To fight a recession, the Federal Reserve should:
A. Buy government bonds
B. Sell government bonds
C. Increase government spending
D. Decrease government spending
E. Decrease taxes
54. If the economy is performing below its capacity,
which of the following is true?
A. Aggregate demand can rise without a
substantial increase in the price level.
B. Aggregate supply can increase without a
substantial increase in the price level.
C. The unemployment rate is low.
D. Investment is too high.
E. None of the above.
55. Which of the following is not a phase of the
business cycle?
A. Peak
B. Expansion
C. Contraction
D. Unemployment
E. Trough
56. What step(s) is the government likely to take to
fight demand-pull inflation?
A. Increase government spending and decrease
taxes.
B. Decrease spending and increase taxes.
C. Increase both spending and taxes.
D. Decrease both spending and taxes.
E. Increase interest rates. - Classical economists argue that:
A. The economy needs government spending
to grow.
B. The economy needs increases in taxes
to grow.
C. The economy needs decreases in taxes
to grow.
D. The economy should be left alone.
E. The economy needs the government to create
laws protecting the economy from a decline.
58. What step(s) can the Federal Reserve take to
reduce a federal budget?
A. Increase government spending.
B. Decrease spending and increase taxes.
C. Decrease taxes.
D. Increase interest rates.
E. None of the above.
Part IV: AP Macroeconomics & Microeconomics Tests