AP Macro Review 4

Front

Which of the following graphs best depicts the Phillips curve model of Te Rehunga based on this AD-AS model?

Back

Front

Assume that the velocity of money in Theopolis is 3 and the aggregate supply curve is vertical at $100 million. What impact will an increase in the money supply have on real output?

Back

There will be no impact on real output

Front

Which combination of monetary and fiscal policy would be appropriate to return Mithrim's economy to full employment given a natural unemployment rate of 5% and a current rate of 2%?

Back

Increasing taxes; open market sales

Front

In the graph of the Phillips curve above, an economy moved from point 1 to point 2 to point 3. Which of the following would be the most likely reason for the movement from point 2 to point 3 shown in this graph? A change in the natural rate of unemployment, An increase in aggregate demand, A decrease in aggregate demand (AD), A decrease in short-run aggregate supply (SRAS), An increase in short-run aggregate supply (SRAS)

Back

A decrease in short-run aggregate supply (SRAS)

Front

The economy of Rivendell experienced the AD shock shown in this graph. Which of the following combinations of monetary and fiscal policy would be appropriate to combat the effect on the price level shown in this graph? Increase taxes; open market sales, Sell bonds; increase the reserve requirement, Decrease taxes; increase government spending, Decrease taxes; decrease the reserve requirement, Increase taxes; decrease the reserve requirement

Back

Increase taxes; open market sales

Front

This graph shows the trade-offs facing an economy that produces only two goods.

Back

Production possibilities curve

Front

Point ___ is impossible with existing resources and technology.

Back

X

Front

The short-run aggregate supply curve will shift to the right when: energy prices increase, government regulation increases, prices of inputs decrease, productivity rates decrease

Back

prices of inputs decrease

Front

If Mr. Woodward's disposable income increases from $600 to $650 and her level of personal consumption expenditures increase from $480 to $520, you may conclude that her marginal propensity to

Back

consume is 0.8

Front

In the Keynesian aggregate-expenditure model, if the MPC is 0.75 and gross investment increases by $6 billion, equilibrium GDP will increase by

Back

$24 billion