AP Macroeconomics - Unit 3 Review

The total value of all final goods and services produced in a country in a given year.

• Gross Domestic Product

• Consumer Price Index

• Inflation

• Unemployment

The use of government spending and revenue collection to influence the economy.

• Monetary Policy

• Fiscal Policy

• Congressional Policy

• Executive Policy

The actions the Federal Reserve System takes to influence the level of real GDP and the rate of inflation in the economy.

• Fiscal Policy

• Monetary Policy

• Congressional Policy

• Executive Policy

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

An increase in labor productivity would most likely cause real gross domestic product and the price level to change in which of the following ways

• Increase Real GDP; Increase Price Level
• Increase Real GDP; Decrease Price Level
• Decrease Real GDP; Increase Price Level
• Decrease Real GDP; Decrease Price Level

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

• consume is 0.8

• consume is 0.4

• save is 0.8

• save is 0.4

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

An increase in personal income taxes will most likely result in which of the following changes in real GDP and the price level in the shortrun?

• Decrease Real GDP; Decrease Price Level
• Increase Real GDP; Decrease Price Level
• Decrease Real GDP; Increase Price Level
• Increase Real GDP; Increase Price Level

Which would be least appropriate for expansionary fiscal policy

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