AP Macroeconomics 💶
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Multiple Choice Practice for National Income and Price Determination
Welcome to Unit 3 AP Macroeconomics Multiple Choice Questions! Grab some paper and a pencil 📄 to record your answers as you go. You can see how you did on the Unit 3 Practice Questions Answers and Review sheet once you're done. Don't worry, we have tons of resources available if you get stumped 😕 on a question. And if solo study is not your thing, join a group in Hours!
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Facts about the test: The AP Macroeconomics exam has 70 multiple choice questions and you will be given 1 hour to complete the section. That means it should take you around 8 minutes to complete 10 questions.
*The following questions were not written by College Board and, although they cover information outlined in the AP Macroeconomics Course and Exam Description, the formatting on the exam may be different.
1. The aggregate demand curve is downward sloping because of the ____________ relationship between price level and real GDP.
A. positive
B. inverse
C. non-existent
D. double
2. Which of the following will result in a leftward shift of the aggregate demand curve?
A. A decrease in net exports.
B. An increase in net exports.
C. A decrease in the price of materials.
D. An increase in the price of materials.
3. Which of the following will produce movement along the AD curve?
A. an increase in household income
B. a change in price
C. a decrease in the availability of key resources
D. a change in price level
4. During a particular recessionary period, government economists calculate the recessionary gap at $800 million. If MPC is .5 and there is no crowding out, what government should:
A. decrease taxes by $900 million
B. increase spending by $400 million
C. increase taxes by $200 million
D. decrease spending by $250 million
5. Which of the following would have the smallest expansionary effect on AD in the short run?
A. an increase in net exports
B. a decrease in government spending
C. a decrease in consumer consumption
D. A decrease in taxes
6. If labor becomes more productive,
A. the short-run aggregate supply curve will shift to the left
B. the aggregate demand curve will shift to the right
C. the short-run aggregate supply curve will shift to the right
D. the aggregate demand curve will shift to the left
7. Which of the following is true for the long run?
A. wages and prices are flexible
B. unemployment increases
C. wages and prices are sticky
D. price levels always increase
8. If nominal wages adjusted immediately to changes in price level,
A. the short-run aggregate supply curve would be vertical
B. the unemployment rate would sharply increase
C. the short-run aggregate demand curve would not exist
D. monetary policy would be rendered ineffective
9. If an economy is operating above full employment output,
A. there is no equilibrium.
B. the equilibrium of LRAS is under the AD curve.
C. the equilibrium of the SRAS and AD curves is located on the LRAS curve
D. the equilibrium of the SRAS and AD curve is to the right of the LRAS curve.
10. If an economy is at full employment equilibrium, which of the following would lead to stagflation?
A. a leftward shift of the aggregate demand curve only
B. a leftward shift of the short-run aggregate supply curve only
C. a rightward shift of the short-run aggregate supply curve only
D. a rightward shift in both the short-run aggregate supply curve and the aggregate demand curve
11. When the long-run aggregate supply curve shifts to the right, which of the following has occurred?
A. a rise in price level
B. a rise in unemployment
C. economic growth
D. economic shrinkage
12. If an economy is in long-run equilibrium, a shift in the AD curve will change
A. both the price level and inflation in the long run
B. only the price level in the long run
C. only the output level in the long run
D. neither the price level or the output level in the long run
13. If the government wanted to use discretionary fiscal policy to reduce inflation in the short run, it would
A. increase taxes or decrease government spending
B. decrease taxes or increase government spending
C. increase both taxes and government spending
D. decrease both taxes and government spending
14. Expansionary fiscal policy could include
A. an increase in exports
B. an increase in taxes
C. a decrease in consumer spending
D. a decrease in taxes
15. An example of a transfer payment that could be used as non-discretionary fiscal policy during a recession is
A. unemployment insurance
B. international trade relationships
C. education programs
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💸Unit 1 – Basic Economic Concepts
📈Unit 2 – Economic Indicators & the Business Cycle
💲Unit 3 – National Income & Price Determination
💰Unit 4 – Financial Sector
⚖️Unit 5 – Long-Run Consequences of Stabilization Policies
🏗Unit 6 – Open Economy - International Trade & Finance
📝Exam Skills: MCQ/FRQ
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