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AP Macroeconomics 💶
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Multiple Choice Practice for Economic Indicators and the Business Cycle
Welcome to Unit 2 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 2 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. Measuring GDP through the income approach includes:
A. the sum of exports sent to all of the factors of production
B. the amount of goods produced through international trade only
C. the total amount of GDP produced through government spending and investment
D. the sum of income paid to all the factors of production
2. The circular flow model is a visual representation of:
A. total expenditures equalling total income
B. comparative advantage and absolute advantage
C. government spending on exports
D. national debt and deficit spending
3. One limitation of GDP is that it does not account for:
A. international trade
B. environmental degradation
C. consumer purchases
D. government spending
4. The expenditure approach to calculation GDP would NOT count which of the following:
A. a used video game system bought at a garage sale
B. a sandwich bought at your local deli
C. government spending on a new bridge
D. a business purchasing new ovens for a restaurant
5. If the labor force is 20,000, structural unemployment is 400 and frictional unemployment is 600, what is the natural rate of unemployment?
A. 10%
B. 20%
C. 15%
D. 5%
6. Which of the following would be considered frictionally unemployed?
A. Carlos, a VCR repairman, had to close his sop because of a lack of customers.
B. Nick has just graduated from college with a degree in accounting and is looking for a new job.
C. During a recession, Arya was laid off from her job and has not found work yet.
D. Jaiden was looking for work after college, but decided to stop searching after having no job offers for two months.
7. The labor force of country Y is 82,000 and the population is 100,000, what is the labor force participation rate?
A. 1.20%
B. 82%
C. 18,000
D. 82,000
8. CPI measures changes in
A. the cost of all goods and services produced in one nation in one year
B. the cost of a select market basket of goods and services
C. the unemployment rate during a recession
D. the wage rate for workers in a given economy
9. If a nation is experiencing a recession, which of the following is necessarily true?
A. There is a decrease in unemployment.
B. Nominal wages increase.
C. Demand-pull inflation increases.
D. There is a decrease in real GDP.
10. Real GDP is different than nominal GDP because it
A. is adjusted for price level changes using a price index
B. includes overseas production for international trade
C. relies only on production data from the previous year
D. excludes inflationary increases from the current year
11. Calculate the growth rate of real GDP is a country's nominal GDP grew by 5%, and the GDP deflator increased by 12%.
A. -7%
B. 7%
C. 17%
D. 60%
12. On a business cycle following the typical sequence, after an economy experiences a recession and trough, it will experience
A. a peak
B. a recession
C. an expansion
D.a negative output gap
13. Of the following, who would benefit from unanticipated inflation?
A. savers
B. lenders
C. borrowers
D. all of the above
14. During a recession, which type of unemployment would increase?
A. structural
B. frictional
C. natural
D. cyclical
15. Transfer payments are not included in GDP calculations because
A. they are not needed in a healthy economy
B. they are included in previous years' calculations
C. they would decrease GDP through their addition
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Browse Study Guides By Unit
💸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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