The CLEP: Principles of Macroeconomics examination was developed by the College Board as a way for individuals to demonstrate undergraduate-level knowledge and skills in this area. Almost three thousand American colleges give credit to students who pass a CLEP exam; for this reason, many college-bound students take a CLEP exam in order to skip over introductory courses.
To succeed on the Principles of Macroeconomics exam, students will need to master the following topics and skills: significant economic terms and concepts; interpretation and manipulation of economic graphs; interpretation and evaluation of economic data; and the application of simple economic models. The content of the exam is broken down as follows: basic economic concepts (8-12% of the exam); measurement of economic performance (12-16%); national income and price determination (10-15%); financial sector (15-20%); inflation, unemployment, and stabilization policies (20-30%); economic growth and productivity (5-10%); and the open economy, including international trade and finance (10-15%). The Principles of Macroeconomics exam consists of 80 multiple-choice questions and must be completed within 90 minutes.
After the exam is complete, an unofficial score report will be made available. This score report will include the total score on a scale of 20 to 80; the American Council on Education recommends that students get credit if they score 50 or above. The total score is the raw score (number of correct answers) adjusted according to the difficulty of the exam version. The College Board does not distinguish between unanswered questions and questions answered incorrectly, so test-takers are encouraged to respond to every question. Some of the questions on the exam are pre-test questions, which are used to develop future versions of the exam and do not contribute to the raw score. It is impossible for test-takers to determine which questions are pre-test questions. The CLEP exams are administered in both computer and paper formats at over a thousand locations throughout the world. To register for an exam, visit the College Board website.
CLEP Principles Of Macroeconomics Practice Questions
1. What is one result of an increase in the money supply?
A: short-run increase in demand
B: short-run increase in the level of output
C: long-run increase in demand
D: long-run increase in the level of output
E: long-run increase in supply
2. What happens to the multiplier as autonomous consumption decreases?
A: It goes up.
B: It fluctuates wildly.
C: It goes down.
D: It remains constant.
E: Its activity is unpredictable
3. What is the equation for the velocity of money?
A: (nominal GDP) / (money supply)
B: (real GDP) / (money supply)
C: (money supply) / (real GDP)
D: (money supply) / (nominal GDP)
E: (real GDP) / (nominal GDP)
4. What is calculated by subtracting net national product from indirect taxes?
B: nominal GDP
C: real GDP
D: tax loss
E: national income
5. In order to claim economic growth, a country must have sustained increases in _____.
A: nominal GDP
B: national income
C: real GDP
D: net national product
6. Which part of the American government influences monetary policy by purchasing government securities?
A: Federal Reserve
B: executive branch
C: Supreme Court
D: House of Representatives
7. What is the name given to the economic policy of using government spending and taxes to influence short-run levels of GDP?
A: Keynesian monetary policy
B: Keynesian fiscal policy
C: classical economics
D: fiscal responsibility
E: laissez-faire economics
8. If the price index in Japan was 200 in 2004 and 220 in 2005, what was the inflation rate during this two-year period?
9. When GDP grows at a slower-than-normal pace, what will be the relationship between the actual and natural rates of unemployment?
A: The actual rate will be higher than the natural rate.
B: The actual rate will be the same as the natural rate.
C: The natural rate will be higher than the actual rate.
D: The actual rate will be unrelated to the natural rate.
E: The relationship between actual and natural rates cannot be predicted.
10. What is it called when a country agrees to limit its exports to another country?
C: voluntary export restraint
D: export hiatus
E: limited trade agreement
CLEP Principles Of Macroeconomics Answer Key
1. B. An increase in the money supply will enable manufacturers to briefly increase output.
2. D. Decreases in autonomous consumption have no effect on the multiplier.
3. A. The velocity of money is the speed with which money is earned and spent in an economy.
4. E. The national income is the amount of money earned after taxes.
5. C. Only long-term gains in real GDP can be cited as evidence of economic growth.
6. A. The Federal Reserve is charged with performing open market operations such as these.
7. B. John Maynard Keynes advocated short run adjustments to the economy through government spending.
8. C. The price index has gone up 20 points, which is 10% of the original price index (200).
9. A. When GDP growth lags, unemployment will be higher than it should be.
10. C. Voluntary export restraints are usually instigated by the importing country as a means of protecting domestic business.