This section, along with AD/AS is the second most tested.
Here are the multiple choice questions for the 2010, AP Macroeconomics exam.
Notice, topics questioned include:
T-accounts, Velocity of Money, Bond Prices, Res. Requirements, Rational Expectations
*(the FRQ's for this section are quite easy compared to the wealth of knowledge you need to be able to answer the Multiple choice)
Answer (A) Reduce Inflation
Answer (A) increase in the nominal output
Answer (C) Interest rates will decline
Answer (C) increasing the reserve requirements
Answer (C) selling bonds on the open market
Answer (B) Rational Expectations
Answer (B) demand deposits
Answer (D) Engage in Open Market Purchases
Answer (B) It falls when interest rates rise, because the opportunity cost of holding money increases.
Answer (B) Increase - Decrease
Answer (D) Decrease - Decrease
Answer (E) Buying Bonds increases the MS, which lowers the interest rate
Answer (E) a decrease of $5 million