AP Macroeconomics Practice Test 8

Test Information

Question 12 questions

Time 14 minutes

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1. If the government of country Z increases spending by $12 million dollars and raises tax collections by the same amount, then what will be the overall impact of these moves on real GDP in country Z?

2. Suppose you observe an economy where prices are falling and real GDP is rising. This may have been caused by

3. Which of the following would reduce economic growth?

4. Currency held by the public

5. According to Classical economic theory, the equation of exchange demonstrates the neutrality of money only if the

6. Economy X is an open economy with flexible exchange rates. Economy Y is closed. Ceteris paribus expansionary monetary policy is

7. An increase in the price of forklifts imported into the United States from Belgium will

8. An increase in the demand for money in the economy could result from

9. The international value of the dollar will appreciate if

10. The potential amount of money created after the Fed increases bank reserves will be diminished if

11. An increase in the federal deficit may affect the demand for loan funds and therefore the real interest rate and investment spending. Which of the following gives the correct direction of these effects?

Demand for loanable funds      Real interest rate      Investment spending

12. If the inflation rate is expected to increase in the immediate future, then