What does full employment equilibrium imply about the economy of country Alpha?
AP Macroeconomics FRQ Review #3

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History
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9th - 12th Grade
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Medium
ADAM GARCIA
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5 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Current output is below potential output.
The economy is experiencing high inflation.
The economy is in a state of recession.
Current output is equal to potential output.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How does a recession in country Beta affect country Alpha's aggregate demand?
It remains unchanged despite Beta's economic downturn.
It increases as Beta's demand for imports rises.
It decreases because Beta buys fewer goods from Alpha.
It increases due to higher exports to Beta.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What monetary policy should the Central Bank of Alpha implement to counteract the recession effects from Beta?
Sell government bonds to increase money supply.
Decrease interest rates to boost aggregate demand.
None of the above.
Increase interest rates to reduce money supply.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the relationship between interest rates and bond prices?
No relationship exists between the two.
Inversely related: as interest rates fall, bond prices rise.
Bond prices are unaffected by changes in interest rates.
Directly proportional: as one increases, so does the other.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What open market operation can the Central Bank perform to maintain the nominal interest rate after a drop in credit card fees?
Sell bonds to decrease the money supply.
Buy bonds to increase the money supply.
Decrease the discount rate offered to banks.
Increase the reserve requirements for banks.
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