AP Macroeconomics Practice Test 16

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Question 12 questions

Time 14 minutes

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1. Suppose that households increase the demand for U.S. Treasury bonds as financial assets. Which of the following accurately describes changes in the money market, the interest rate, and the value of the dollar in foreign currency markets?

MONEY MARKET     INTEREST RATE     DOLLAR

2. If households are more optimistic about the future, how would the consumption function be affected?

3. U.S. real GDP most likely falls when

4. If current real GDP is $5,000 and full employment real GDP is at $4,000, which of the following combinations of policies is the most likely to have brought the economy to this point?

5. If a nation is operating at full employment, and the central bank engages in contractionary monetary policy, the nation can expect the interest rate, the purchases of new homes, and the unemployment rate to change in which of the following ways?

INTEREST RATES     NEW HOMES     UNEMPLOYMENT RATE

6. Expansionary monetary policy is designed to

7. If the economy is operating at full employment, which of the following policies will create the most inflation in the short run?

8. Which of the following is a component of the M 1 measure of money supply?

9. Assuming that households save a proportion of disposable income, which of the following relationships between multipliers is correct?

10. The fractional reserve banking system's ability to create money is lessened if

11. All else equal, when the United States exports more goods and services,

12. If the reserve ratio is 10 percent and a new customer deposits $500, what is the maximum amount of money created?