AP Macroeconomics Practice Test 7

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Question 12 questions

Time 14 minutes

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1. An Italian company opens a shoe factory in the U.S. The production from this shoe company is included in

2. Which of the following is NOT included in GDP?

3. An increase in the price level reduces total spending in the economy because

I. consumers' incomes cannot go as far now that prices have risen.

II. foreigners by less.

III. higher prices result in higher interest rates, which lower spending.

4. Suppose real GDP increases. We can conclude without a doubt that

5. The appropriate fiscal policy to remedy a recession is to

6. Which of the following would lead to a decrease in the money supply?

7. If interest rates rise relatively more in country A than in country B, then the value of country A's currency will

8. If the marginal propensity to consume equals .75 and government spending increases by $100 million, then overall real GDP can be expected to

9. Inflation

10. Which of the following persons is considered to be unemployed?

I. Mary, who has quit her job to look for another.

II. John, who fulfilled his dream by retiring from work at age 45.

III. Diane, who works part-time but would like to work full-time.


Figure the dollar amount represented by the distance A-B in the diagram above. Assume the MPC = 0.8.

12. The population of country X is exactly the same as country Y, but country X produces twice as much output as country Y. We can conclude that