AP Macroeconomics Practice Test: Keynes' Remedy for the Great Depression

Test Information

Question 15 questions

Time 18 minutes

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1. Fiscal policy refers to

2. A federal deficit occurs when

3. The appropriate fiscal policy to remedy a recession

4. The appropriate fiscal policy to remedy inflation calls for

5. To close a recessionary gap

6. To close an expansionary gap

7. One drawback of using fiscal policy to close a recessionary gap is that

8. Use the following three responses to answer the question: Fiscal policy is not always effective because of

I. crowding out.

II. rational expectations.

III. the balanced budget amendment.

9. Stagflation occurs when

10. Study the diagram below.

11. Crowding out

12. The theory of rational expectations

13. Study the diagram below.

14. Automatic, or built-in, stabilizers

15. The Phillips curve