AP Macroeconomics Practice Test 3

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Question 12 questions

Time 14 minutes

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Which of the following is illustrated in the figure above?

I. Stagflation

II. Cost-push inflation

III. Supply-side inflation

IV. Demand-pull inflation

2. The government of a country decides to increase government spending and taxes by the same amount in order to keep a balanced budget. The MPC is 0.75. Which of the following is true of this situation?

Policy Direction     Expenditure Multiplier     Tax Multiplier

3. Having a fractional reserve banking system means that

4. If technology makes production less expensive and at the same time exports decrease, which of the following will result with certainty?

5. Which of the following must exist to allow for mutual benefit from specialization and trade between two countries?

6. The GDP Deflator differs from the CPI in that the GDP Deflator

7. It is a monetarist point of view that

8. Which group of people will suffer the most from a rising price level?

9. Droughts, technical glitches, and restrictions on the use of resources can all result in

10. On a bank's balance sheet, which of the following is considered a liability?

11. Suppose yesterday the euro was trading on the foreign exchange market at $1.36 U.S. and today it is trading at $1.40 U.S. Which of the following is true?

12. In order to reduce or eliminate crowding out, expansionary fiscal policy can be accompanied by