AP Macro Unit 5 Quiz

How can we increase public policy?

• Technological Investment

• Educational Spending

• Fiscal Policy through government spending / taxation

• Crowding-Out

Long-run aggregate supply is most likely to increase as the result of

• increased investment in capital

• an increase in aggregate demand

• an increase in the real interest rate

• an increase in the exchange rate

Which of the following policies might the Fed adopt to counter a recession?

• An increase in the required reserve ratio

• An increase in government spending

• The purchase of bonds

• A decrease in taxes

An open-market purchase of government bonds accompanied by a decrease in income taxes will result in which of the following in the short run?

• a decrease in the price level

• a decrease in the natural rate of unemployment

• a decrease in unemployment

• a decrease in nominal wages

If tax revenues are less than the total of government spending plus government transfer payments, which of the following will happen?

• the national debt will increase

• there will be an inflationary gap

• the national debt will decrease

• the tax multiplier will increase

To reduce the size of a country's national debt, a government could potentially take all of the following actions EXCEPT:

• finance spending by borrowing

• decrease the supply of government bonds

• increase taxes

• decrease expenditures

Steady advances in technological development will result in which of the following?

• the LRAS curve will shift to the left, resulting in economic growth and a higher natural unemployment rate

• the LRAS curve will shift to the left, resulting in a lower price level and a higher full employment level of output

• the SRAS curve will shift to the right, resulting in a higher price level and a higher natural rate of unemployment

• the SRAS curve will shift to the right, resulting in economic growth and a lower natural unemployment rate

A decrease in the demand for labor could be caused by which of the following?

• an increase in wage rates

• an increase in worker productivity

• a decrease in wage rate

• a decrease in the price of the product that the labor is used to produce

Which is not included in the definition of M1?

• Fiat Currencies

• Saving Deposits

• Traveler's Checks

• Checking Deposits

Which of the following would the FED use to increase the money supply?

• Raise the discount rate

• Raise the required reserves

• Buy bonds/securities

• Print more money