AP Macro Unit 3

The shifters of aggregate supply are

• Inflationary expectations

• Change in resource prices

• Changes in actions of the government

• Changes in productivity

The long run aggregate supply curve is vertical because...

• Price level increases but GDP doesn't

• GDP increases but price level doesn't

• GDP decreases but price level doesn't

• Price level decreases but GDP doesn't

The long run aggregate supply curve is also known as

• The natural rate of unemployment

• Full-employment

• The natural rate of employment

• Cyclical unemployment

If the price of imported Canadian lumber increases

• AS shifts left (decrease)

• AS shifts right (increase)

• AD shifts left (decrease)

• AD shifts right (increase)

Changes in price level

• Shift the AD curve left (decrease)

• Shift the AD curve right (increase)

• Move along the AD curve

• Shift the AS curve right (increase)

• Shift the AS curve left (decrease)

Shifters of aggregate demand include

• Change in consumer spending

• Change in investment spending

• Change in government spending

• Change in net exports

Assume the economy is in long run equilibrium and the government increases spending on healthcare

• AD will shift right and an inflationary gap will result

• AD will shift left and a recessionary gap will result

• AS will shift right and an inflationary gap will result

• AS will shift left and a recessionary gap will result

• No change will result

Assume the economy is in long run equilibrium and trading partners increase the price of oil, a key resource

• AD will shift right and an inflationary gap will result

• AD will shift left and a recessionary gap will result

• AS will shift right and an inflationary gap will result

• AS will shift left and a recessionary gap will result

• No change will result

Assume that the economy is at long run equilibrium and that the government increases spending. In the short run, AD will increase. In the long run, what will happen?

• AD will decrease

• AS will decrease

• AD will increase

• AS will increase

The debate between Classical and Keynesian economics revolves around the price of resources

• Easily going up and easily going down

• Sticky

• Easily going up, but not easily going down

• Flexible