AP Macroeconomics Review

Based on an examination of the graph, what conclusions can be drawn regarding the production possibilities of corn and jeans?

• The blue curve indicates a decrease in the capacity to produce both corn and jeans, resulting in economic growth.
• The blue curve indicates an increase in the capacity to produce both corn and jeans, resulting in economic growth.
• The blue curve indicates an increase in the capacity to produce both corn and jeans, resulting in economic decline.
• The blue curve indicates a decrease in the capacity to produce both corn and jeans, resulting in economic decline.

Which would be least appropriate for expansionary fiscal policy

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

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

Contractionary fiscal policy would most likely be used during...

• recessions
• times where economy is operating at full employment
• periods of sustained, demand pull inflation
• Anytime we have a negative GDP gap

If the MPC is .80, the government spending multiplier is:

• 4
• 5
• 3
• 2

What is NOT a consequence of expansionary fiscal policy?

• AD shifts Right
• Increased Price levels
• increased output
• increased unemployment

What is NOT a consequence of contractionary fiscal policy

• aggregate demand shifts left
• price level increases
• unemployment increases
• output decreases

What is NOT a consequence of contractionary fiscal policy

• aggregate demand shifts left
• price level increases
• unemployment increases
• output decreases

During a recession, which of the following is likely to occur?

• an increase in real wages
• an increase in production
• and increase in the GDP growth rate
• an increase in the unemployment rate

Which of the following would NOT be considered part of the labor force?

• Tyler, a banker who feels he is overqualified for his job.
• Savana, who is unemployed but has attended  three job interview in the last month.
• Ricky, who has a part-time job but wants a full-time job.
• Garrett, a stay-at-home dad.