- What occurs when full employment is reached?
A. There is no unemployment.
B. Only teenagers are counted as unemployed.
C. There is about a 5 percent rate of
unemployment.
D. Only seasonal and cyclical unemployment
exist.
E. None of the above. - Which of the following is true when the economy
is operating at productive capacity?
A. Aggregate demand can increase aggregate
supply by having firms employ more
workers.
B. Aggregate demand can decrease the price
level by hiring more workers.
C. The price level will rise if demand continues
to increase.
D. There will be no price level increase.
E. Deflation will occur. - If Jill lost her job because the economy is in a
recession, this is an example of:
A. Structural unemployment
B. Cyclical unemployment
C. Seasonal unemployment
D. A discouraged worker
E. Frictional unemployment - Which of the following is an example of a
contractionary fiscal policy?
A. A decline in spending and taxes
B. Tax increases; a decline in spending
C. A rise in spending; a decrease in taxes
D. An increase in spending and taxes
E. An increase in interest rates - What is a possible reason for tax cuts failing to
stimulate the economy?
A. The tax cut is permanent and raises
disposable income.
B. The tax cut is temporary and the price level
is rising.
C. The tax cut increases production of goods
and services.
D. The tax cut makes it easier for consumers to
purchase goods.
E. None of the above.
34. To an economist, investment means:
A. Purchasing bonds
B. Purchasing capital
C. Purchasing stocks
D. Purchasing mutual funds
E. Putting your money in a savings account
35. Which of the following discourages exports?
A. Increasing the reserve requirements
B. Increasing the tax on imports
C. Decreasing the tax on imports
D. Increasing government spending
E. Decreasing a tax on domestic firms
36. The purpose of monetary policy is to:
A. Control government spending
B. Shift aggregate demand
C. Increase GDP
D. Alter the money supply
E. Increase taxes - Which of the following explains why the long-run
Phillips Curve is vertical?
A. The inflation rate is always the same.
B. The natural rate of unemployment never
changes.
C. Any level of inflation can occur at the full-
employment rate in the long run.
D. Any level of unemployment can occur at the
full-employment rate of inflation in the long
run.
E. None of the above.
38. What step does the Fed take when it decides to
decrease the money supply?
A. Reduces interest rates
B. Increases interest rates
C. Increases private spending
D. Sells government bonds
E. Decreases the reserve ratio
39. What impact will a tariff have on imported cars?
A. The tariff will make cars more expensive
domestically.
B. The tariff will decrease unemployment.
C. The tariff will increase spending.
D. The tariff will encourage investment.
E. There will be no impact on imported cars.
Part IV: AP Macroeconomics & Microeconomics Tests