AP Macro Unit 3 Test Review

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

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

In which of the following ways will increases in short-run aggregate supply change the price level and unemployment?

Price level/Unemployment

• Increase/No change

• Decrease/Decrease

• Decrease/Increase

• Decrease/No change

• No change/Increase

As the average price level decreases, the purchasing power of people's cash balances increases. This results in an increase in spending. This effect is called

• the Laffer effect

• the Keynesian effect

• the money illusion effect

• the real balance effect

• the neutrality of money

If the spending multiplier is 5, the value of the tax multiplier must be

• 5

• 4

• 1

• 3