Question 1

What is the correct term for the ability to produce something with a lower opportunity cost?

Accepted Answer

A)  Comparative advantage
B)  Absolute advantage
C)  Opportunity cost advantage
D)  Efficiency A

Question 2

The aggregate quantity of raw and manufactured goods demanded by consumers increases when the:

Accepted Answer

A)  Personal consumption increases
B)  Government spending decreases
C)  Foreign investment decreases
D)  Interest rates remain the same A

Question 3

What is the correct equation for figuring out the capital-account balance?

Accepted Answer

A)  Trade balance + services balance + unilateral
B)  Federal government spending tax collections
C)  Real interest rate + anticipated inflation
D)  Foreign purchases of home assets home purchases of foreign assets D

Question 4

The United States enforces a strict trade policy on Asian oak imports. Manufacturers are only allowed a certain amount annually according to the size of their operations. What is this referred to?

Accepted Answer

A)  Export quota
B)  Import tariff
C)  Import quota
D)  Export tariff

Question 5

Economists state that government purchases have a multiplier effect on aggregate demand. In other words, every dollar spent by the government leads to an increase in aggregate demand for goods and services by a dollar or more. According to the multiplier equation below, what does MPC stand for? Multiplier = 1/(1-MPC)
A)Marginal propensity to consume
B)Medium proportion to consumption
C)Marginal proportion to consumption
D)Medium propensity to consume

Accepted Answer

The answer of Economists state that government purchases have a...

Question 6

Changes in economic activities that are expressed in price fluctuations are attributed to inflation. All of the following are types of inflation except:

Accepted Answer

A)  Built-in
B)  Opportunity-pull
C)  Demand-pull
D)  Cost-push

Question 7

During the 1990s and due to a civil war, Nigeria experienced capital flight, especially by foreign investors. Capital flight is a significant and sudden reduction in the _______ within a country.

Accepted Answer

A)  Insurance against fraud
B)  Loanable funds
C)  Supply assets
D)  Demand for assets

Question 8

If the tax multiplier is ?4 and net taxes are reduced by $200 billion, what will the output be?

Accepted Answer

A)  $600 billion
B)  $100 billion
C)  $800 billion
D)  $50,000

Question 9

The short run aggregate supply (SRAS) curve is graphed:

Accepted Answer

A)  As a sloping upward line
B)  Is steeper below full employment than above it
C)  As a horizontal line
D)  With consumer personal income against product quantity

Question 10

Fae would spend $75 per week even if she did not have a steady income. As it stands, her weekly income is $1,000. If Fae's marginal propensity to consume is 0.8, how much does Fae save per week?

Accepted Answer

A)  $75
B)  $925
C)  $125
D)  $0

Question 11

When government spending (G) goes up, does the aggregate demand curve (AD) shift? If so, which way?
A)No
B)Yes. The curve shifts to the left.
C)Yes. The curve shifts to the right.
D)It is impossible to tell given the information.

Accepted Answer

The answer of When government spending (G) goes up, does...

Question 12

What is the likely outcome if the government does not react to a cost-push inflation situation with any governmental/economic policy?

Accepted Answer

A)  A significantly lower unemployment rate
B)  A recession
C)  A boom
D)  An increase in per capita GDP

Question 13

Imagine that the consumer price index rises from 125 to 250. What can be concluded from this information?

Accepted Answer

A)  Consumer incomes are all doubled
B)  Consumer incomes are cut in half
C)  All prices in the average consumer's market basket are doubled
D)  All prices in the given economy are doubled

Question 14

Think of the expenditure approach for calculating GDP. In this approach, spending of firms, the government, individual households, and the rest of the world are added up using the formula:
GDP = C + I + G + (X-M)
What do X and M stand for, respectively?

Accepted Answer

A)  Imports; exports
B)  Exports; imports
C)  Personal consumption; investment in new capital
D)  Government spending; subsidy payments

Question 15

What does MPC stand for?

Accepted Answer

A)  Multiplier of personal consumption
B)  Mean of personal contributions
C)  Monies due to private contractors
D)  Marginal propensity to consume

Question 16

Economists are in general agreement about what would need to occur in order to reach sustained inflation. What would need to happen?

Accepted Answer

A)  The Federal Reserve would have to increase the money supply
B)  The Federal Reserve would have to decrease the money supply
C)  The government must decrease taxes
D)  Credit card companies would have to issue more credit to consumers

Question 17

If one currency increases in value relative to another currency, economists say that the currency that increased in value has ___________.

Accepted Answer

A)  Grown
B)  Appreciated
C)  Depreciated
D)  Increased

Question 18

An aggregate demand curve is the sum of demand curves from different segments of the economy. Such a curve (Yd) takes into account four different economic indicators, as seen below. What does the "C" stand for in Yd = C + I + G + (X?M)?
A)Consumption
B)Cost
C)Competition
D)Cycle

Accepted Answer

The answer of An aggregate demand curve is the sum...

Question 19

Which classical economist argued that investment demand does not depend so much upon interest rates, but rather about the expectations about the prosperity of the economy?

Accepted Answer

A)  Say
B)  Keynes
C)  Fisher
D)  Phillips

Question 20

The following are types of unemployment except:

Accepted Answer

A)  Seasonal
B)  Structural
C)  Frictional
D)  Dynamic

Exam 30: (AP) Macroeconomics: Part A