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 : 15
The term hyperinflation refers to:

An extremely high and rapidly increasing inflation rate

A moderate and stable inflation rate

A period of deflation in the economy

A period of steady economic growth

Question No : 16
If the government runs a budget deficit, it means that:

Government spending exceeds government revenue

Government revenue exceeds government spending

Government revenue and spending are equal

Taxes are too high

Question No : 17
The term automatic stabilizers refers to:

Government policies that automatically adjust to stabilize the economy during economic fluctuations

The tools used by the central bank to stabilize the money supply

The policies implemented by the government to control inflation

The policies implemented by the government to control unemployment

Question No : 18
The term inflationary gap refers to a situation where:

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 : 19
The term money multiplier refers to:

The ratio of the change in the money supply to the change in the monetary base

The ratio of government spending to the level of GDP

The ratio of taxes to disposable income

The ratio of investment to savings in an economy

Question No : 20
The term opportunity cost of capital refers to:

The return that could have been earned if the capital was used in an alternative investment

The total cost incurred in producing a good or service

The cost of goods and services in an open economy

The total cost of producing all units of a good or service

Question No : 21
The term monetary base refers to:

The total amount of money in circulation in an economy

The total amount of money held by banks as reserves

The total amount of money held by households and businesses

The total amount of money created by the central bank