AP Macroeconomics Final 2022(Complete solutions)
An economy is operating at a point inside its production possibilities curve (PPC). Which of the
following will most likely cause the economy to move toward the current PPC in the short run?
correct answersAn increase in employment
An increase in which of the following will most likely promote economic growth? correct
answersConsumption of nondurable goods
Which of the following will cause aggregate supply to increase in Country X? correct
answersThe discovery of low-cost alternative sources of energy
**Factory X/Factory Y Bikes/Skateboards Graph**
The graph above shows the production possibilities curve for Factory X and Factory Y. If
Factory X uses the same amount of resources to produce skateboards and bikes as Factory Y
uses, which of the following is true? correct answersFactory X has a comparative advantage in
producing skateboards.
An increase in the price of oil, an important input to production, will result in which of the
following in the short run? correct answersA decrease in short-run aggregate supply
An economy is currently operating at the full-employment level of output. Which of the
following would result in a recessionary gap in the short run? correct answersAn increase in the
costs of production
Thailand and Malaysia are trading partners. If the price level in Thailand decreases relative to the
price level in Malaysia, what will happen to Thailand's exports to Malaysia and Thailand's
aggregate demand? correct answersThailand's Exports: Increase
Thailand's Aggregate Demand: Increase
Country X produces only apples and bananas. The following table shows prices and quantities of
both products in two years.
Assuming year 1 is the base year, what is the nominal and real gross domestic product (GDP) for
year 2 ? correct answersNominal GDP: $280
Real GDP: $200
Which of the following is a fiscal policy action aimed at reducing unemployment? correct
answersDecreasing income taxes
Increases in human capital can be achieved by which of the following? correct
answersImproving the quality of job-training programs
If the marginal propensity to save is 0.25, a $15 billion increase in government spending will
lead to an increase in national income by a maximum of correct answers$60 billion
, Assume the economy is currently in long-run equilibrium. An increase in the money supply will
affect unemployment in the short run and in the long run in which of the following ways? correct
answersShort run: Falls below the natural rate
Long run: Rises back to the natural rate
The term "value added" for a firm is best defined as which of the following? correct answersThe
firm's sales minus the cost of inputs purchased from other firms
An increase in a country's current account surplus will result in which of the following in the
short run? correct answersAn increase in the country's net financial capital outflows
Using 2010 as the base year, the gross domestic product (GDP) deflator in 2011 was 97. Which
of the following must be true? correct answersThe inflation rate in 2011 was negative.
According to the business cycle represented in the diagram above, the actual rate of
unemployment equals the natural rate of unemployment when the economy is correct answerson
the potential line
A fiscal policy action to reduce inflationary pressure would be to increase which of the
following? correct answersIncome tax rates
The nominal gross domestic product of China in 2010 is a measure of the total value of which of
the following in 2010? correct answersFinal goods and services produced within the borders of
China
Assume the government reduces its spending and raises income taxes in an effort to reduce the
budget deficit. The most likely short-run result will be an increase in correct
answersunemployment
Which of the following is true about inflation and interest rates? correct answersIf there is no
actual or expected inflation, the nominal and real interest rates are equal.
Economic growth is shown by a rightward shift in correct answersthe production possibilities
curve
During a period of stagflation, a nation is most likely experiencing correct answersa decrease in
short-run aggregate supply
If businesses become optimistic about the profitability of investments in an economy, which of
the following will happen in the loanable funds market in the short run? correct answersThe
interest rate will increase.
If investment demand becomes less responsive to changes in interest rates, which of the
following is true? correct answersAn expansionary fiscal policy results in less crowding out.
An economy is operating at a point inside its production possibilities curve (PPC). Which of the
following will most likely cause the economy to move toward the current PPC in the short run?
correct answersAn increase in employment
An increase in which of the following will most likely promote economic growth? correct
answersConsumption of nondurable goods
Which of the following will cause aggregate supply to increase in Country X? correct
answersThe discovery of low-cost alternative sources of energy
**Factory X/Factory Y Bikes/Skateboards Graph**
The graph above shows the production possibilities curve for Factory X and Factory Y. If
Factory X uses the same amount of resources to produce skateboards and bikes as Factory Y
uses, which of the following is true? correct answersFactory X has a comparative advantage in
producing skateboards.
An increase in the price of oil, an important input to production, will result in which of the
following in the short run? correct answersA decrease in short-run aggregate supply
An economy is currently operating at the full-employment level of output. Which of the
following would result in a recessionary gap in the short run? correct answersAn increase in the
costs of production
Thailand and Malaysia are trading partners. If the price level in Thailand decreases relative to the
price level in Malaysia, what will happen to Thailand's exports to Malaysia and Thailand's
aggregate demand? correct answersThailand's Exports: Increase
Thailand's Aggregate Demand: Increase
Country X produces only apples and bananas. The following table shows prices and quantities of
both products in two years.
Assuming year 1 is the base year, what is the nominal and real gross domestic product (GDP) for
year 2 ? correct answersNominal GDP: $280
Real GDP: $200
Which of the following is a fiscal policy action aimed at reducing unemployment? correct
answersDecreasing income taxes
Increases in human capital can be achieved by which of the following? correct
answersImproving the quality of job-training programs
If the marginal propensity to save is 0.25, a $15 billion increase in government spending will
lead to an increase in national income by a maximum of correct answers$60 billion
, Assume the economy is currently in long-run equilibrium. An increase in the money supply will
affect unemployment in the short run and in the long run in which of the following ways? correct
answersShort run: Falls below the natural rate
Long run: Rises back to the natural rate
The term "value added" for a firm is best defined as which of the following? correct answersThe
firm's sales minus the cost of inputs purchased from other firms
An increase in a country's current account surplus will result in which of the following in the
short run? correct answersAn increase in the country's net financial capital outflows
Using 2010 as the base year, the gross domestic product (GDP) deflator in 2011 was 97. Which
of the following must be true? correct answersThe inflation rate in 2011 was negative.
According to the business cycle represented in the diagram above, the actual rate of
unemployment equals the natural rate of unemployment when the economy is correct answerson
the potential line
A fiscal policy action to reduce inflationary pressure would be to increase which of the
following? correct answersIncome tax rates
The nominal gross domestic product of China in 2010 is a measure of the total value of which of
the following in 2010? correct answersFinal goods and services produced within the borders of
China
Assume the government reduces its spending and raises income taxes in an effort to reduce the
budget deficit. The most likely short-run result will be an increase in correct
answersunemployment
Which of the following is true about inflation and interest rates? correct answersIf there is no
actual or expected inflation, the nominal and real interest rates are equal.
Economic growth is shown by a rightward shift in correct answersthe production possibilities
curve
During a period of stagflation, a nation is most likely experiencing correct answersa decrease in
short-run aggregate supply
If businesses become optimistic about the profitability of investments in an economy, which of
the following will happen in the loanable funds market in the short run? correct answersThe
interest rate will increase.
If investment demand becomes less responsive to changes in interest rates, which of the
following is true? correct answersAn expansionary fiscal policy results in less crowding out.
