Free CLEP Principles of Macroeconomics Practice Test (2026)

You own a bond that pays a fixed $50 in interest each year. Market interest rates on new bonds of similar risk then rise from 5% to 6%. What happens to the price at which you could sell your bond?

Farmers can grow either corn or soybeans on the same land. The price of corn rises sharply because of strong demand for ethanol. Other things equal, what will most likely happen in the market for soybeans?

A sudden jump in world oil prices pushes short-run aggregate supply to the left, so the price level goes up while real output drops. If the central bank responds by increasing the money supply, the most likely result is

Which of these is included in this year's U.S. gross domestic product (GDP)?

Households spend 80% of any change in their disposable income. The government increases its purchases of goods and services by $10 billion and pays for them with a $10 billion increase in lump-sum taxes. If the price level and interest rates don't change, what happens to equilibrium real GDP?

Consumers in Japan develop a strong new taste for U.S.-made goods. Other things equal, what happens in the foreign exchange market for dollars and yen?

During a long recession, many unemployed people stop looking for work because they believe no jobs are available. Other things equal, how does this affect the official unemployment rate and the labor force participation rate?

Which of the following is a main reason discretionary fiscal policy may take effect too late to help end a particular recession?

Assume a hypothetical required reserve ratio of 10%. A bank has $500,000 in checkable deposits and holds $80,000 in reserves. What is the largest amount this single bank can safely lend right now?

Which sequence describes the interest-rate effect, one of the reasons the aggregate demand curve slopes downward?

Which of the following would shift an economy's production possibilities curve outward?

In Country A, producing 1 shirt means giving up 2 bushels of wheat. In Country B, producing 1 shirt means giving up 4 bushels of wheat. If the two countries specialize and trade shirts for wheat, which price would make trade beneficial to both?

For ten years in a row, a government spends more than it collects in revenue, yet the ratio of its debt to GDP falls over the decade. How can this happen?

A household moves $1,000 from its checking account into a one-year certificate of deposit (a small time deposit) at the same bank. What happens to M1 and M2?

From one year to the next, a country's nominal GDP rises by 6% and its GDP deflator rises by 4%. About how much did real GDP change?

If an economy's actual real GDP is above its full-employment (potential) level, it is most likely that

Workers and firms come to expect a higher rate of inflation than before. What happens to the short-run Phillips curve?

Which of the following transactions is recorded in the U.S. current account rather than the financial account?

A bank makes a one-year loan at a fixed nominal interest rate of 6%, expecting inflation of 2%. Inflation actually turns out to be 5%. Which statement about the real interest rate the bank actually earned is correct?

When the price of beef rises sharply, many households buy more chicken and less beef. The consumer price index (CPI) is based on a fixed basket of goods. As a measure of the change in the cost of living, the CPI will therefore tend to

An increase in the money supply will have the smallest effect on real GDP when

An economy produces only computers and wheat, and its production possibilities curve is bowed outward. A new technology raises productivity in computer production only. Which statement is true?

Many workers' nominal wages are fixed by multiyear contracts. If the price level rises unexpectedly, what is the most likely short-run result?

Over one year, a country's real GDP rises from $10.0 trillion to $10.5 trillion, while the total number of hours worked rises by 2%. About how much did labor productivity (real output per hour worked) grow?

A government increases its spending and pays for it by borrowing, which pushes up domestic interest rates. In an economy with a flexible exchange rate and open financial markets, which chain of effects is most likely?