AP Macroeconomics FINAL EXAM
2025 Questions and Answers
Suppose that the sonsumer price index rises from 100 to 200. From this information, we
may conclude that - ✔✔C. The prices in an average consumer's market basket are
doubled.
Suppose that a national government increased deficit spending on goods and services,
increasing its demand for loanable funds. IN the long run, this policy would most likely
result in which of the following changes in the country? - ✔✔C. Real Interest Rate:
Increase; Investment: Decrease
In an economy with lump-sum taxes and no international trade, if the marginal
propensity to consume is 0.8, which of the following is true? - ✔✔C. When investment
increases by $1, income increases by a maximum of $5.
If the government increases expenditures on good and services and increases taxation
by the same amount, which of the following will occur? - ✔✔B. Aggregate demand will
increase.
To counteract a recession, the Fed should - ✔✔E. buy securiies on the open market and
lower the discount rate
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
, If the government simultaneously engages in expansionary monetary and fiscal
policies, which of the following is the likely effect on interest rates and unemployment?
- ✔✔D. Interest Rates: Indeterminate; Unemployment: Decrease
If the Fed sells a significant amount of government securities in the open market, which
of the following will occur? - ✔✔A. The total amount of loans made by commerical
banks will decrease.
The purchase of bonds by the Fed will have the greatest effect on real gross domestic
product if which of the following situations exists in the economy? - ✔✔C. The required
reserve ratio is low, and the marginal propensity to consume is low.
Which of the following will most likely occur as a result of an increase in labor
productivity in an economy? - ✔✔A. An increase in output and a decrease in inflation
Which of the following is most likely to cause an increase in the international value of
the US dollar? - ✔✔A. Higher US real interest rates
On a short-run Philips curve, high rates of inflation coincide with - ✔✔D. Low
unemployment rates
If the reserve requirement is 25% and banks hold no excess reserves, an open market
sale of $400,000 of government securities by the Fed will - ✔✔B. decrease the money
supply by up to $1.6 million
16. An increase in which of the following would cause an increase in aggregate supply?
- ✔✔A. Labor productivity
Which of the following is true when the velocity of money falls? - ✔✔A. An increase in
the money supply will have less effect on nominal gross national product.
A stimulative fiscal policy combined with a restrictive monetary policy will necessarily
cause - ✔✔D. Interest rates to rise
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
2025 Questions and Answers
Suppose that the sonsumer price index rises from 100 to 200. From this information, we
may conclude that - ✔✔C. The prices in an average consumer's market basket are
doubled.
Suppose that a national government increased deficit spending on goods and services,
increasing its demand for loanable funds. IN the long run, this policy would most likely
result in which of the following changes in the country? - ✔✔C. Real Interest Rate:
Increase; Investment: Decrease
In an economy with lump-sum taxes and no international trade, if the marginal
propensity to consume is 0.8, which of the following is true? - ✔✔C. When investment
increases by $1, income increases by a maximum of $5.
If the government increases expenditures on good and services and increases taxation
by the same amount, which of the following will occur? - ✔✔B. Aggregate demand will
increase.
To counteract a recession, the Fed should - ✔✔E. buy securiies on the open market and
lower the discount rate
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
, If the government simultaneously engages in expansionary monetary and fiscal
policies, which of the following is the likely effect on interest rates and unemployment?
- ✔✔D. Interest Rates: Indeterminate; Unemployment: Decrease
If the Fed sells a significant amount of government securities in the open market, which
of the following will occur? - ✔✔A. The total amount of loans made by commerical
banks will decrease.
The purchase of bonds by the Fed will have the greatest effect on real gross domestic
product if which of the following situations exists in the economy? - ✔✔C. The required
reserve ratio is low, and the marginal propensity to consume is low.
Which of the following will most likely occur as a result of an increase in labor
productivity in an economy? - ✔✔A. An increase in output and a decrease in inflation
Which of the following is most likely to cause an increase in the international value of
the US dollar? - ✔✔A. Higher US real interest rates
On a short-run Philips curve, high rates of inflation coincide with - ✔✔D. Low
unemployment rates
If the reserve requirement is 25% and banks hold no excess reserves, an open market
sale of $400,000 of government securities by the Fed will - ✔✔B. decrease the money
supply by up to $1.6 million
16. An increase in which of the following would cause an increase in aggregate supply?
- ✔✔A. Labor productivity
Which of the following is true when the velocity of money falls? - ✔✔A. An increase in
the money supply will have less effect on nominal gross national product.
A stimulative fiscal policy combined with a restrictive monetary policy will necessarily
cause - ✔✔D. Interest rates to rise
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
