AP Macro Unit 3

Categorize the Macroeconomic Graphs into their correct sections

Groups:

(a) Recessions

,

(b) Expansions

,

(c) Stagflation & Positive Supply Shock

,

(d) Economic Growth

• 
• 
• low output, cyclical (high) unemployment, deflation

• 
• 
• 
• Due to new resources or new technology

• 
• can be fixed using Expansionary Fiscal Policy

• high output, deflation, low unemployment

• high output, low unemployment, demand-pull inflation

• 
• low output, cyclical (high) unemployment, cost-push inflation

• 
• 
• can be fixed using Contractionary Fiscal Policy

• 
• 
• 

Remitopia's GDP falls short by $450 billion. How much can they change in Government spending to reach their goal? Their current MPC is 90%.

• $45 billion

• $50 billion

• $50

• $4.5 trillion

Remitopia's GDP falls short by $450 billion. How much can they change in taxes to reach their goal? Their current MPS is 10%.

• $45 billion

• $50 billion

• $45

• $50 trillion

Velaris is experiencing a recession. They want to increase their GDP. To do this they are changing their Govt spending by $4 million and their taxes by $2 million. Their current MPC is 75% Select the correct total GDP(AD) change and how they should change taxes & spending. (Select more than one answer)

• Increase in government spending will lead to a $16 million total GDP change

• Decrease in government spending will lead to a $16 million total GDP change

• A tax cut will lead to a $6 million total AD change

• A tax increase will lead to a $6 million total AD change

Adarlan is experiencing an expansion. They want to decrease their GDP by $80 trillion. Their current MPS is 20% Select the correct change in taxes and spending. (Select more than one answer)

• Increase government spending by $16 trillion

• Decrease government spending by $16 trillion

• Decrease taxes by $20 trillion

• Increase taxes by $20 trillion

MPS is 20%. What is the Expenditure (Spending) Multiplier?

• 20

• 4

• 5

• 80

MPS is 20%. What is the Tax Multiplier?

• 20

• 4

• 5

• 80

MPS is 20%. Government spends $1 million. How does this affect AD?

• Increase by $5 million

• Decrease by 20

• Decrease by $5 million

• Increase by $4 million

MPS is 20%. Taxes are cut by $1 million. How does this affect AD?

• Increase by $5 million

• Decrease by 20

• Decrease by $5 million

• Increase by $4 million

MPS is 20%. The government wants to reach a GDP goal of $100 million. What's the change in spending?

• $20 million

• $100 million

• $25 million

• 20