AP Macroeconomics 2021 exam with complete Solution

AP Macroeconomics 2021 exam with complete Solution A country's government runs a budget deficit when which of the following occurs in a given year? - (B) Government spending exceeds tax revenues. A high marginal propensity to consume implies which of the following? - (E) A low marginal propensity to save. The transaction demand for money is very closely associated with money's use as a - (D) medium of exchange. Unlike a market economy, a command economy uses - (A) more centralized planning in economic decision making. The value of a country's currency will tend to appreciate if - (A) demand for the country's exports increases. Which of the following best illustrates an improvement in a country's standard of living? - (A) An increase in real per capita gross domestic product Hyperinflation is typically caused by - (B) continuous expansion of the money supply to finance government budget deficits All of the following changes will shift the investment demand curve to the right EXCEPT - (C) an increase in the real interest rate The official unemployment rate understates the unemployment level in the economy because the official unemployment rate - (B) ignores underemployed and discouraged workers If a reduction in aggregate supply is followed by an increase in aggregate demand, which of the following will definitely occur? - (D) the price level will increase Which of the following combinations of changes in government spending and taxes is necessarily expansionary? - (B) Government Spending - Increase Taxes - decrease The amount of money that the public wants to hold in the form of cash will - (C) decrease if interest rates increase For an economy consisting of households and businesses only, which of the following is consistent with the circular flow of income and production? - (C) households are suppliers of resources and consumers of goods and services. With an increase in the real interest rate, consumption and real gross domestic product will most likely change in which of the following ways? - (D) Consumption - decrease Real Gross Domestic Product - Decrease According to the short-run Philips curve, lower inflation rates are associated with - (A) higher unemployment rates Which of the following will lead to a decrease in a nation's money supply? - (D) an increase in reserve requirements An increase in which of the following would cause the aggregate demand curve to shift to the left? - (D) income taxes Which of the following changes in the supply of and the demand for a good will definitely result in a decrease in both the equilibrium price and quantity of the good? - (C) Supply - no change Demand - decrease Bank A: Assets: Actual Reserves $1000 Loans $4000 Liabilities: Demand Deposits $5000 Bank B: Assets: Actual Reserves $100 Loans: $500 Liabilities: Demand Deposits $600 Bank C: Assets: Actual Reserves $10 Loans $90 Liabilities Demand Deposits $100 Based on the balance sheets above for the three different banks, which of the following is true, if the reserve requirement is 10 percent? - (D) Bank B can increase its loans by $40 Which of the following will most likely lead to a decrease in inflationary expectations? - (C) a decrease in the money supply With an upward-sloping SRAS curve, an increase in government expenditure will most likely - (C) increase real gross domestic product Which of the following are most likely short-run effects of an increase in government expenditures? - (C) unemployment rate - decrease inflation rate - increase GDPr - increase In the short run, an expansionary monetary policy would most likely result in which of the following changes in the price level and real GDP? - (E) Price Level - increase Real GDP - increase