AP Macroeconomics Final Exam rated A
What is the most fundamental issue that economics addresses? - Use of scarce
resources
Inflation occurs when there is a sustained increase in - average price level
An increase in spending in an economy will cause a multiplied increase in GDP
because - consumption increases as income increases
A contraction in the money supply will most likely change the nominal interest
rate and aggregate demand in what way in the short run? - Nominal Interest Rate-
Increase, Aggregate Demand- Decrease
If the economy is in a severe recession, what policy action is most appropriate? -
Increasing both the money supply and government spending
The most liquid asset is - currency
If nominal interest rate is 8% and the expected inflation is 3%, the real interest
rate is - 5%
, AP Macroeconomics Final Exam rated A
An increase in the international value of the US dollar will most likely benefit -
retired US citizens living overseas on their social security checks
What group would most likely gain from unanticipated inflation? - Individuals who
have borrowed money at fixed interest rates
The purchase of securities on the open market by the Federal Reserve will -
Increase the supply of money
Total spending in the economy is most likely to increase by the largest amount if
what occurs to government spending and taxes? - Government Spending-
Increase, Taxes- Decrease
For an economy consisting of households and businesses only, what is consistent
with the circular flow of income and production? - Households are suppliers of
resources and consumers of goods and services
If a banking system's reserves are $100 billion, demand deposits are $500 billion,
and the system is fully loaned-up, the the reserve ratio must be - 20%
(100/500=0.2)
What is the most fundamental issue that economics addresses? - Use of scarce
resources
Inflation occurs when there is a sustained increase in - average price level
An increase in spending in an economy will cause a multiplied increase in GDP
because - consumption increases as income increases
A contraction in the money supply will most likely change the nominal interest
rate and aggregate demand in what way in the short run? - Nominal Interest Rate-
Increase, Aggregate Demand- Decrease
If the economy is in a severe recession, what policy action is most appropriate? -
Increasing both the money supply and government spending
The most liquid asset is - currency
If nominal interest rate is 8% and the expected inflation is 3%, the real interest
rate is - 5%
, AP Macroeconomics Final Exam rated A
An increase in the international value of the US dollar will most likely benefit -
retired US citizens living overseas on their social security checks
What group would most likely gain from unanticipated inflation? - Individuals who
have borrowed money at fixed interest rates
The purchase of securities on the open market by the Federal Reserve will -
Increase the supply of money
Total spending in the economy is most likely to increase by the largest amount if
what occurs to government spending and taxes? - Government Spending-
Increase, Taxes- Decrease
For an economy consisting of households and businesses only, what is consistent
with the circular flow of income and production? - Households are suppliers of
resources and consumers of goods and services
If a banking system's reserves are $100 billion, demand deposits are $500 billion,
and the system is fully loaned-up, the the reserve ratio must be - 20%
(100/500=0.2)
