AP®︎ Macroeconomics: Topic 5.3 Practice Test
Prepare for your quiz, test, or the AP exam with focused practice questions on Topic 5.3 of AP Macroeconomics – Money Growth and Inflation.
Questions List
Topic 5.3
Question 1 Easy
This question tests the following: POL-3.A.3
What is the main cause of inflation according to the quantity theory of money?
What You’re Being Tested On:
Explore the learning objectives taken directly from the College Board’s AP® Macroeconomics Curriculum. Ensure you’re prepared for the exact topics covered on the AP® exam, in-class tests, and quizzes, and gain confidence in your mastery of the material.
Topic 5.3: Money Growth and Inflation
Learning Objective: POL-3.A
a. Explain (using graphs as appropriate) how inflation is a monetary phenomenon. b. Define the quantity theory of money. c. Calculate the money supply, velocity, the price level, and real output using the quantity theory of money.
Essential Knowledge: POL-3.A.1
Inflation (deflation) results from increasing (decreasing) the money supply at too rapid of a rate for a sustained period of time.
Essential Knowledge: POL-3.A.2
When the economy is at full employment, changes in the money supply have no effect on real output in the long run.
Essential Knowledge: POL-3.A.3
In the long run, the growth rate of the money supply determines the growth rate of the price level (inflation rate) according to the quantity theory of money.
