AP Macroeconomics Unit 3 Review

Front

What causes the aggregate demand curve to slope downwards?

Back

Inverse relationship between price level and real GDP

Front

What is the primary reason for the negative relationship between price level and real GDP in the context of aggregate demand?

Back

All of the above

Front

What is the formula for the simple spending multiplier?

Back

1 / Marginal Propensity to Save

Front

How does the tax multiplier compare to the spending multiplier?

Back

It is one less than the spending multiplier.

Front

What happens to the short-run aggregate supply curve when there is an increase in the price of key resources?

Back

Shifts to the left

Front

What triggers a shift in the short-run aggregate supply curve?

Back

A change in the availability of key resources.

Front

What is the effect of expansionary fiscal policy on aggregate demand?

Back

Increases aggregate demand

Front

What role does government spending play in expansionary fiscal policy?

Back

It is increased to stimulate the economy

Front

Which of the following is an example of an automatic stabilizer? Government increasing taxes to fight inflation, A new law to increase public spending, Central bank adjusting interest rates, Unemployment benefits

Back

Unemployment benefits

Front

How do progressive tax systems function as automatic stabilizers?

Back

By increasing taxes as income increases