AP Unit 5 Review

Front

What will happen to aggregate production and income per capita if there is an increase in a nation’s capital stock?

Back

Aggregate production will increase, and income per capita will increase.

Front

Given the following data: Tax Revenue = 500 Government Spending = 500 Government Transfer Payments = 200 Private Savings = 700 Investment Spending = 700 Which statement is most likely to be true? Options: There is a government surplus, There is a budget deficit, Private savings and investment are not in equilibrium, National Debt is decreasing

Back

There is a budget deficit

Front

Tax Revenue = 500
Government Spending = 500
Government Transfer Payments = 200
Private Savings = 700
Investment Spending = 700
What will happen to the real interest rate and private investment spending?

Back

Real interest will increase, private investment will decrease

Front

If subsidies for research and development on new technologies lead to an increase in the average productivity of labor, what will most likely happen to real GDP per capita and long-run aggregate supply (LRAS) for a given population size?

Back

Real GDP per capita will increase, and LRAS will increase.

Front

If the current economy is in an inflationary gap, what combination of fiscal and monetary policies will bring the economy back to long run equilibrium?

Back

Contractionary fiscal policy and Contractionary monetary policy

Front

If the country has limited reserves and the economy is in a recession, which combination of fiscal and monetary policy actions would move the economy back toward full employment? Options: A decrease in government spending and an increase in the discount rate, A decrease in income taxes and targeting a higher policy rate, An increase in government spending and a decrease in the required reserve ratio, A decrease in income taxes and a sale of government bonds on the open market by the country’s central bank.

Back

An increase in government spending and a decrease in the required reserve ratio.

Front

The central bank increases the money supply by 5 percent. According to the quantity theory of money, what will happen in the long run for a given velocity of money? Options: Unemployment will increase by 5%, Nominal GDP increased by 5%, Real GDP increased by 5%, Price level will decrease by 5%

Back

Nominal GDP increased by 5%

Front

An economy is in long-run equilibrium. If the central bank reduces the growth rate of the money supply, which of the following must occur in the long run? Options: The rate of inflation will decrease., The unemployment rate will decrease., The long-run aggregate supply curve will shift to the left., The long-run Phillips curve will shift to the left.

Back

The rate of inflation will decrease.

Front

The sum of budget surplus and budget deficit is...

Back

National Debt

Front

According to the quantity theory of money, if the money supply is $100 billion, real output is $50 billion, and the price level is $5, what is the velocity of money?

Back

2.5