AP Macroeconomics Practice Test 21

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Question 15 questions

Time 18 minutes

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1. Which of the following is true about the relationship between the M1 and M2 measures of money?

2. Which of the following increases the size of the tax multiplier?

3. Which of the following might worsen a nation's trade deficit?

4. If the economy is suffering from extremely high rates of inflation, which of the following fiscal policies would be an appropriate strategy for the economy?

5. Which of the following is an example of an expansionary supply shock?

6. Which of the following fiscal policy combinations would be most likely to slowly increase real GDP without putting tremendous upward pressure on the price level?

7. Which of the following is an example of contractionary monetary policy?

8. The economy is in a deep recession. Given this economic situation, which of the following statements about monetary policy is accurate?

9. Daddy Morebucks withdraws $1 million from his savings account and puts the cash in his refrigerator. This affects M1 and M2 in which of the following ways?

M1     M2

10. What is the main difference between the short-run and long-run Phillips curve?

11. Which of the following insures the value of the U.S. dollar?

12. The reserve ratio is .10 and Mommy Morebucks withdraws $1 million from her checking account and keeps it as cash in her refrigerator. How does this withdrawal potentially impact money in circulation?

13. If the economy were experiencing a recessionary gap, choose the option below that would be an appropriate fiscal policy to eliminate the gap, and the predicted impact of the policy on real GDP and unemployment.

FISCAL POLICY     REAL GDP     UNEMPLOYMENT

14. Monetary tools of the Federal Reserve do not include which of the following choices?

15. Of the following choices, which combination of fiscal and monetary policy would most likely reduce a recessionary gap?

FISCAL POLICY     MONETARY POLICY