AP Macro (3.1-3.5) Review

Front

Which of the following best describes the aggregate demand curve?

Back

It is a curve that shows the level of spending by consumers, businesses, the government, and the foreign sector at different price levels.

Front

Which of the following explains the relationship between the price level and real output along the aggregate demand curve? Options: At a lower price level, people need more money to spend and therefore deposit less money in banks, which lowers interest rates and increases real output., At a lower price level, the real value of savings decreases which causes an increase in spending., At a lower price level, domestic goods will become less expensive compared to foreign goods, which causes an increase in spending on domestic goods., At a lower price level, real incomes decrease which causes an increase in spending., At a lower price level, the purchasing power of consumers’ income decreases which causes an increase in spending.

Back

At a lower price level, domestic goods will become less expensive compared to foreign goods, which causes an increase in spending on domestic goods.

Front

The government of Euroland is considering increasing government spending to avoid a recession. What is the most likely effect on aggregate demand (AD) in Euroland?

Back

There will be a rightward shift in the AD curve.

Front

An increase in taxes on businesses in the United States will likely have what impact on the short-run aggregate supply(SRAS) curve in the United States?

Back

It will cause the SRAS curve to shift leftward.

Front

Which of the following is true about the equilibrium real output in the aggregate demand-aggregate supply (AD-AS) model in the short run? Options: Equilibrium real output is always above full employment., Equilibrium real output is always below full employment., Equilibrium real output is always equal to full employment., Equilibrium real output can be above, equal to, or below full employment., Equilibrium real output is always indeterminate.

Back

Equilibrium real output can be above, equal to, or below full employment.

Front

Assume the economy of Country A is in long-run equilibrium. What will happen in the short run in Country A if one of its major trading partners, Country B, experiences a recession?

Back

Aggregate demand will increase and the price level will increase.

Front

Which of the following will cause a rightward shift of the short-run aggregate supply curve? Options: An increase in consumption spending, An increase in nominal wages, An increase in income taxes, A decrease in the price level, A decrease in the costs of production

Back

A decrease in the costs of production

Front

Which of the following will most likely cause the short-run aggregate supply curve to shift to the left? A decrease in nominal wages, A decrease in the expected rate of inflation, An increase in energy prices, An increase in the price level, An increase in the size of the labor force

Back

An increase in energy prices

Front

Which of the following is not a component of AD: Consumption expenditure, Gross investment, NFIA, Net Exports?

Back

NFIA

Front

Which of the following is NOT a shifter of the SRAS curve? a change in productivity, a change in net exports, a change in the actions of government, a change in resource prices

Back

a change in net exports