Practice Quiz

CLEP Principles of Macroeconomics Exam Prep - Question List

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31. What states that as the price of a product rises, people purchase less of that good, leading to a decrease in demand?
  1. Law of supply
  2. Command economy
  3. Law of demand
  4. Law of increasing opportunity costs
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32. Economists state that government purchases have a multiplier effect on aggregate demand. In other words, every dollar spent by the government leads to an increase in aggregate demand for goods and services by a dollar or more. According to the multiplier equation below, what does MPC stand for? Multiplier = 1/(1-MPC)
  1. Marginal propensity to consume
  2. Medium proportion to consumption
  3. Marginal proportion to consumption
  4. Medium propensity to consume
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33. Which of the following is the correct term for the simple act of giving one thing up for another?
  1. Opportunity cost
  2. Profit motive
  3. Trade-off
  4. Command
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34. Which of the following economic questions must any society answer, regardless of its location, size, or political form?
  1. Who will consume the services and goods produced?
  2. What goods will be produced?
  3. What methods of producing goods are appropriate for our society?
  4. All of the above
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35. If the tax multiplier is −4 and net taxes are reduced by $200 billion, what will the output be?
  1. $600 billion
  2. $100 billion
  3. $800 billion
  4. $50,000
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