- If current unemployment is at 10 percent and the
price level is stable, what would a Keynesian
recommend?
A. An increase in interest rates
B. A decrease in interest rates
C. A decrease in taxes
D. An increase in government spending and
taxes
E. An increase in government spending and a
decrease in taxes - The government can reduce an inflationary gap by:
A. Increasing spending
B. Increasing the supply of money
C. Decreasing the money supply
D. Increasing personal income taxes
E. Decreasing the reserve requirement - What does the circular flow include?
A. Businesses buying from households in a
factor market
B. Households buying from businesses in a
factor market
C. Households buying from the government in a
factor market
D. Government regulation over what is sold and
bought
E. Only a monetary flow of goods and services - If the required reserve ratio is 20 percent and
Marty’s bank has no excess reserves, what impact
will a $100 deposit have on the bank’s excess
reserves?
A. $50 in excess reserves
B. $100 in excess reserves
C. $500 in excess reserves
D. $80 in excess reserves
E. $120 in excess reserves - If more people decide to hold currency as opposed
to keeping it in the bank, which of the following is
likely to occur?
A. An increase in interest rates
B. An increase in the reserve requirement
C. An increase in employment
D. An increase in disposable income
E. An increase in the price level
41. Which of the following would be most effective in
stimulating aggregate demand?
A. Increased taxes
B. Decreased taxes
C. Increased government spending
D. Decreased government spending
E. Decreased money supply - What happens to the price level when there is an
increase in taxes?
A. It decreases.
B. It stabilizes.
C. It increases.
D. There is no impact on the price level.
E. None of the above. - Which of the following best describes a supply
shock?
A. It changes the price level in the economy.
B. It affects only the general price level.
C. It can always be anticipated.
D. It can change the short-run aggregate supply
curve into the long run aggregate supply curve.
E. It does not harm the economy. - If from 2003–2004 the unemployment level
decreased from 6.5 percent to 5.9 percent and the
inflation rate fell from 2.9 percent to 1.3 percent,
which of the following could explain these changes?
A. The aggregate demand curve shifted to the left.
B. The aggregate demand curve shifted to the
right.
C. The aggregate supply curve shifted to the
right.
D. The aggregate supply curve shifted to the left.
E. The production possibilities curve shifted to
the left. - What occurs to autonomous investment when
there is an increase in interest rates?
A. It increases because investors want to earn
more for their money.
B. It increases because less people want to spend.
C. It decreases because businesses have less
incentive to borrow money.
D. It decreases because the government
increases spending.
E. Interest rates do not influence autonomous
investment.
Part IV: AP Macroeconomics & Microeconomics Tests