AP Macro Unit 3 Test Review

Which of the following best describes the short-run aggregate supply curve?

• The amount buyers plan to spend on output

• A curve showing the relationship between inputs and outputs

• A curve showing the trade-off between inflation and unemployment

• A curve indicating the level of real output that will be purchased at each possible price level

• A curve indicating the level of real output that will be produced at each possible price level

A change in which of the following will cause the aggregate demand curve to shift?

• energy prices

• productivity rates

• consumer wealth

• prices of inputs

• prices of consumer goods

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

• energy prices increase

• government regulation increases

• prices of inputs decrease

• investment spending decreases

• productivity rates decrease

A rightward shift in the aggregate demand curve will cause employment and the price level to change in which of the following ways in the short run?

Employment/Price level

• Increase/Increase

• Increase/Decrease

• Increase/No change

• Decrease/Increase

• No change/No change

An increase in the capital stock will cause the

• aggregate demand curve to shift left

• aggregate demand curve to shift right

• production possibilities curve to shift in

• short-run aggregate supply curve to shift left

• long-run aggregate supply curve to shift right

Which of the following will increase aggregate demand?

• a decrease in personal income taxes

• a decrease in government spending

• an increase in corporate income taxes

• a decrease in the capital stock

• an increase in interest rates

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

Real GDP/Price Level

• Increase/Increase

• Increase/Decrease

• Increase/No change

• Decrease/Increase

• Decrease/No change

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

• consume is 0.8.

• consume is 0.4.

• consume is 0.25.

• save is 0.8.

• save is 0.25.

Which effect describes the effect that when the price level increases, the interest rate increases and consumption decreases?

• interest rate effect

• net export effect

• Pareto effect

• substitution effect

• real balance effect

The change in real GDP that occurs when an increase in the price level leads to a change in the relative prices of imports and exports is a result of the

• interest rate effect

• net export effect

• Pareto effect

• substitution effect

• real balance effect