AP Macro Unit 3 Vocab

What are the three factors that explain the downward sloping aggregate demand curve?

• The Consumption Effect, The Saving Effect, The Tax Effect

• The Price Effect, The Output Effect, The Investment Effect

• The Inflation Effect, The Deflation Effect, The Interest Rate Effect

• The Wealth Effect, The Income Effect, The Foreign Purchases Effect

What is the relationship between the level of prices and the quantity of real GDP demanded?

• Horizontal

• Upward sloping

• Vertical

• Downward sloping

Which of the following is NOT a determinant of aggregate demand?

What factors increase aggregate demand?

• Decrease in taxes, Decrease in Government Spending

• Increase in Government Spending, Increase in money supply

• Increase in Net Export Spending, Increase in Consumer Spending

• Decrease in money supply, Increase in taxes

What does the short-run aggregate supply curve represent?

• A time period in which input prices do not change

• A time period in which input prices are fully responsive to changes in price level

• A time period in which output is determined solely by factors of production

• A time period in which output is determined by changes in government spending

What are the determinants of aggregate supply?

• Changes in Input Prices, Changes in Productivity, Changes in the Legal Institutional Environment

• Changes in Consumer Spending, Changes in Investment Spending, Changes in Government Spending

• Changes in Net Export Spending, Changes in Foreign Income, Changes in Business Confidence

• Changes in Taxes, Changes in Money Supply, Changes in Government Spending

What is the term used to describe prices that do not adjust immediately?

• Flexible Prices

• Sticky Prices

• Dynamic Prices

• Fluctuating Prices

What is disposable income?

• Income that people earn from their jobs before taxes are deducted

• Income that people receive from the government as welfare benefits

• Income that people have to spend or save after personal taxes are subtracted from personal income

• Income that people receive from investments and dividends

What is the formula for calculating the Marginal Propensity to Consume (MPC)?

• Change in Consumption / Change in Income

• Change in Consumption / Change in Saving

• Change in Saving / Change in Income

• Change in Income / Change in Consumption

What is the term used to describe the amount by which an economy's AE at the FE GDP exceed those just necessary to achieve the FE GDP?

• Inflationary Gap

• Equilibrium Gap

• Output Gap

• Recessionary Gap