AP MACROECONOMICS FINAL EXAM 2026
COMPLETE QUESTIONS AND VERIFIED
ANSWERS
◉ Inflation occurs when there is a sustained increase in Answer:
average price level
◉ An increase in spending in an economy will cause a multiplied
increase in GDP because Answer: 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? Answer: Nominal Interest Rate- Increase, Aggregate
Demand- Decrease
◉ If the economy is in a severe recession, what policy action is most
appropriate? Answer: Increasing both the money supply and
government spending
◉ The most liquid asset is Answer: currency
, ◉ If nominal interest rate is 8% and the expected inflation is 3%, the
real interest rate is Answer: 5%
◉ An increase in the international value of the US dollar will most
likely benefit Answer: retired US citizens living overseas on their
social security checks
◉ What group would most likely gain from unanticipated inflation?
Answer: Individuals who have borrowed money at fixed interest
rates
◉ The purchase of securities on the open market by the Federal
Reserve will Answer: 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?
Answer: 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?
Answer: Households are suppliers of resources and consumers of
goods and services
COMPLETE QUESTIONS AND VERIFIED
ANSWERS
◉ Inflation occurs when there is a sustained increase in Answer:
average price level
◉ An increase in spending in an economy will cause a multiplied
increase in GDP because Answer: 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? Answer: Nominal Interest Rate- Increase, Aggregate
Demand- Decrease
◉ If the economy is in a severe recession, what policy action is most
appropriate? Answer: Increasing both the money supply and
government spending
◉ The most liquid asset is Answer: currency
, ◉ If nominal interest rate is 8% and the expected inflation is 3%, the
real interest rate is Answer: 5%
◉ An increase in the international value of the US dollar will most
likely benefit Answer: retired US citizens living overseas on their
social security checks
◉ What group would most likely gain from unanticipated inflation?
Answer: Individuals who have borrowed money at fixed interest
rates
◉ The purchase of securities on the open market by the Federal
Reserve will Answer: 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?
Answer: 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?
Answer: Households are suppliers of resources and consumers of
goods and services
