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Principles of Macroeconomics

The following sample questions do not appear on an actual CLEP examination. They are intended to give potential test-takers an indication of the format and difficulty level of the examination and provide content for practice and review. For more sample questions and information about the test, see the CLEP Official Study Guide.

Question 3 of 8

Assume that the short-run aggregate supply curve is horizontal and the marginal propensity to consume is 0.75. Assuming no crowding out and no international trade, if the government wishes to increase the equilibrium gross domestic product by $100 million, it should increase government spending by

  • A.

    $20 million

  • B.

    $25 million

  • C.

    $40 million

  • D.

    $75 million

  • E.

    $100 million

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