Ap Economics Answers

AP Economics

Chapter 30

Practice Test

1. When the Federal government uses taxation and spending actions to stimulate the economy it is conducting: 

A. Fiscal policy

B. Incomes policy

C. Monetary policy

D. Employment policy

2. When the Federal government takes budgetary action to stimulate the economy or rein in inflation, such policy is: 

A. Active Monetary Policy

B. Automatic Fiscal Policy

C. Discretionary Fiscal Policy

D. Active Federal Policy

3. When changes in taxes and government spending occur in the economy without explicit action by Congress, such policy is: 

A. Cyclical

B. Implicit

C. Discretionary

D. Nondiscretionary

7. If Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a(n): 

A. Supply-side fiscal policy

B. Expansionary fiscal policy

C. Contractionary fiscal policy

D. Nondiscretionary fiscal policy

9. The set of fiscal policies that would be most contractionary would be a(n): 

A. Increase in government spending and taxes

B. Decrease in government spending and taxes

C. Increase in government spending and a decrease in taxes

D. Decrease in government spending and an increase in taxes

10. The intent of contractionary fiscal policy is to: 

A. Increase aggregate demand

B. Decrease aggregate demand

C. Increase aggregate supply

D. Decrease aggregate supply

11. The goal of expansionary fiscal policy is to increase: 

A. The price level

B. Aggregate supply

C. Real GDP

D. Unemployment

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13. Refer to the above graph. What combination would most likely cause a shift from AD1 to AD2? 

A. An increase in taxes and an increase in government spending

B. A decrease in taxes and an increase in government spending

C. An increase in taxes and no change in government spending

D. A decrease in taxes and a decrease in government spending

14. Refer to the above graph. What combination would most...