Economics Micro & Macro (CliffsAP)

18. Question 18 refers to the following graph.

According to the graph above, which of the

following will result in a decrease in output?

A. A shift to the left of the aggregate supply

curve and a shift to the left of the aggregate

demand curve

B. A shift to the right of the aggregate supply

curve and a shift to the left of the aggregate

demand curve

C. An increase in government spending and a

decrease in taxes

D. A decrease in taxes only

E. None of the above

19. Which of the following will cause the biggest

increase in aggregate demand?

A. A $200 million decrease in taxes

B. A $100 million increase in taxes

C. A $500 million increase in government

spending

D. A $500 million increase in government

spending and a $100 million decrease in

taxes

E. A $500 million increase in government

spending and a $100 million increase in

taxes

20. Which one of the following fiscal policies would
    be most effective for an economy in a severe
    recession?
    A. An increase in government spending
    B. A decrease in government spending
    C. An increase in personal income taxes
    D. The Fed’s decision to sell open-market
    securities
    E. The Fed’s decision to buy open-market
    securities


21. If an increase in the income tax rate is
    implemented in an economy experiencing a
    recession, which of the following will occur?
    A. An increase in unemployment
    B. A decrease in unemployment
    C. A decrease in the price level
    D. An increase in consumer spending
    E. Both A and C


22. Which of the following is a tool of the Federal
    Reserve?
    A. Ta xe s
    B. Selling of bonds
    C. Spending
    D. A reduction of interest rates
    E. An increase in employment


23. What determines the value of the dollar in the
    United States?
    A. Governmental regulations
    B. The amount of gold the United States
    possesses
    C. The goods and services the United States
    will buy
    D. The multiplier
    E. The marginal propensity to save


24. As national income increases, the demand for
    money increases due to:
    A. An increase in consumption of goods and
    services
    B. An increase in interest rates
    C. An increase in the money supply
    D. A change in consumer confidence
    E. An increase in demand for foreign currency.

Real GDP

Price

Level

Part IV: AP Macroeconomics & Microeconomics Tests