AP Macroeconomics Unit 3

Which of the following is true if the production possibilities curve is a curved line concave to the origin?

• Resources are perfectly substitutable between the production of the two goods.
•  It is possible to produce more of both products.
• Both products are equally capable of satisfying consumer wants.
• As more of one good is produced,more and more of the other good must be given up.

Which of the following best describes aggregate supply?

• A schedule indicating the level of real output that will be produced at each possible price level
• A schedule indicating the level of real output that will be purchased at each possible price level
• A schedule showing the trade-off between inflation and unemployment
• A schedule showing the relationship between inputs and outputs

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

The long-run aggregate supply curve will shift to the right when

• foreign exports increase

• government spending increases

• investment increases

• consumption increases

A rightward shift in the aggregate demand curve with a horizontal aggregate supply curve will cause employment and the price level to change in which of the following ways?

• Increase Employment; Increase Price Level
• Increase Employment; No Change to Price Level
• No Change to Employment, Increase Price Level
• Increase Employment; Decrease Price Level

The aggregate demand curve will shift to the right as the result of

• an increase in corporate business taxes

• a decrease in the real interest rate

• recessions in foreign nations that trade with the United States, causing a lower demand for U.S. products

• an increase in the nominal interest rate

In the gross domestic product, the largest dollar amount is

• consumer spending
• rental payments
• net exports of goods and services
• government purchases of goods and services

Which would be least appropriate for expansionary fiscal policy

• Increase taxes
• Decrease taxes
• Increase government spending
• Combination of decreasing taxes and increasing spending

This group is responsible for implementing fiscal policy

• Supreme Court

• Federal Reserve Board

• Council of Economic Advisors

• U.S. Congress

The goal of fiscal policy is to achieve full employment by shifting this curve:

• Long Run Aggregate Supply
• Aggregate Demand
• Short Run Aggregate Supply
• Phillips