CLEP Macroeconomics | CollegePlus

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1. The economy of Hilstonville illustrated by this production possibilities curve produces only swing sets and picnic tables.

At Point A on the curve, what statements must be true?
I. Hilstonville produces more picnic tables than swing sets.
II. Hilstonville must produce fewer picnic tables to produce more swing sets.
III. It will cost more to produce another picnic table than another swing set.
IV. Hilstonville is producing at maximum efficiency.
II Only
II, III, and IV Only
III and IV Only
II and IV Only
I, II, III, and IV

2. Marcie is a hair stylist who charges $30 for a haircut and pays $3 for products used during every haircut. How much does Marcie contribute to the GDP with every haircut given?
$3
$27
$30
$33
Cannot be determined with the information given

3. Which group is most likely to experience the greatest benefit from unexpected inflation?
Borrowers
Workers with variable-wage contracts
Salaried employees
Lenders
Retirees

4. Which event would shift the short-run aggregate supply curve to the right?
An increase in government spending on goods and services
A decrease in the wage rate
An increase in purchases of the country's exports by people in other countries
An increase in investment spending on physical capital
A decrease in taxes levied

5. If a certain country experiences a nominal GDP of $12 trillion and has a money supply of $3 trillion, what is the velocity of money?
1/4
1/3
3
4
9

6. Crowding out has what effect on the supply of loanable funds and on interest rates?
The supply of loanable funds will decrease while interest rates increase.
The supply of loanable funds will decrease while interest rates decrease.
The supply of loanable funds will increase while interest rates decrease.
The supply of loanable funds will increase while interest rates increase.
The supply of loanable funds will remain constant while interest rates decrease.

7. Inflation initiated by increases in wages or other prices is called
Demand-pull inflation
Hyperinflation
Cost-push inflation
Stagnation
Nominal inflation

8. Which of the following would decrease the size of the federal budget deficit?
A recession
An increase in defense spending
An increase in real GDP
A decrease in taxes
An increase in transfer payments

9. Which of the following is an example of "investment" as used in economics?
A police officer purchases 500 shares of stock in an emerging technologies company.
Newlyweds purchase a previously owned home.
One large home security firm purchases another large home security firm.
A librarian purchases $10,000 worth of government securities.
A commercial printing company purchases 5 new printers.

10. When a company devalues its exchange rate, it
Eliminates the flexibility in the exchange rate.
Changes from fixed to flexible exchange rates.
Pegs its currency to a currency that will not depreciate.
Lowers its fixed exchange rate.
Raises its fixed exchange rate.