AP Macro Unit 3 Vocabulary Quiz

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

Sum total; a collection of separate things mixed together.

• Aggregate

• Aggregate Demand

• Aggregate Supply

• Budget Deficit

A schedule or curve that shows the total quantity demanded for all goods and services of a nation at various price levels in a given period of time. It is downward sloping.

• Aggregate Demand (AD)

• Aggregate Supply

• Short Run Aggregate Supply (SRAS)

• Long Run

The total amount of goods and services that all firms in all the industries in a country will produce at various price levels in a given period of time.

• Aggregate Supply

• Long Run Aggregate Supply

• Aggregate Demand

• Equililbrium

Built-in mechanisms in the tax code and transfer payment programs that increase government spending and reduce tax revenue automatically when aggregate demand decreases. They reduce government spending and collect more in tax revenues when aggregate demand increases.

• Automatic Stabilizers

• Budget Deficit

• Budget Surplus

• Disposable Income

When a government spends more than it collects in tax revenues in a given year. The USA typically runs a budget deficit each year. G > T

• Budget Deficit

• Budget Surplus

• Cost-push inflation

• Crowding-out Effect

When a government collects more in tax revenues than it spends in a given year. T > G

• Budget Surplus

• Budget Deficit

• Contractionary Fiscal Policy

• Cost-push inflation

Inflation resulting from a decrease in AS (from higher wage rates and raw material prices, such as the price of oil) and accompanied by a decrease in real output (real GDP) and decreases in employment. Also referred to as "stagflation" or "adverse/negative aggregate supply shock."

• Cost-push inflation

• Demand-Pull Inflation

• Recession

• Stagflation