AP Macroeconomics MCQ Question with Answer

AP Macroeconomics MCQ with detailed explanation for interview, entrance and competitive exams. Explanation are given for understanding.

Question No : 1
In macroeconomics, the term inflation refers to:

An increase in the overall price level of goods and services in an economy

A decrease in the overall price level of goods and services in an economy

An increase in the purchasing power of a currency

A decrease in the purchasing power of a currency

Question No : 2
If the economy is in a recessionary gap, it implies that:

Actual output is less than potential output

Actual output is greater than potential output

The inflation rate is high

The unemployment rate is low

Question No : 3
The term Phillips curve depicts the relationship between:

Inflation and unemployment

Government spending and taxes

Savings and investment

Consumption and income

Question No : 4
The term tax multiplier refers to:

The change in output resulting from a change in government spending

The change in output resulting from a change in taxes

The change in consumption resulting from a change in disposable income

The change in investment resulting from a change in interest rates

Question No : 5
Which of the following is a measure of income inequality?

Gini coefficient

Consumer Price Index (CPI)

Producer Price Index (PPI)

Lorenz curve

Question No : 6
The term velocity of money refers to:

The speed at which money changes hands in an economy

The total amount of money in circulation in an economy

The total amount of money held by households and businesses

The total amount of money held by banks as reserves

Question No : 7
The term deflation refers to:

A decrease in the overall price level of goods and services in an economy

An increase in the overall price level of goods and services in an economy

A decrease in the purchasing power of a currency

An increase in the purchasing power of a currency