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AP MACRO- ADAS Additional Review Flashcards | StudBud
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AP MACRO- ADAS Additional Review
AP MACRO- ADAS Additional Review
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Multiplier, AS, AD, Short & Long Run Shifts Based on Krugman's Economics
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Questions
25
Answers
1
Which is certain of the economy in the drawing?
there is an inflationary gap
there is a recessionary gap
there has been an increase in AD
there has been a incease in SRAS
2
If businesses spend $100 B on investment and the MPC is .75, then GDP will expand by
$750 B
$250 B
$400 B
$350 B
3
Which of the following is TRUE about the Long Run Aggregate Supply Curve
Real GDP is fully flexible in the long-run
it is subject to sticky wages in the long-run
Prices are fully flexible in the long-run
in can't cant shift in the long-run
4
When AS shifted from AS1 to AS2, price level __ and output ___.
decreased, increased
decreased, decreased
increased, decreased
increased, increased
5
What could cause the shift below?
more expensive raw materials
higher incomes
higher wages
better technology
6
If people spend 50% of each new $ they get, the spending multiplier in the economy is___.
2
5
2.5
1
7
What type of Fiscal Policy does Wall Street want the government to do?
Contractionary
Expansionary
8
In the long-run, any increase or decrease in aggregate demand ultimately results ONLY in a change in:
Output
Prices
Attitudes
Unemployment
9
A rise in labor productivity is most likely to result in:
an increase in short-run aggregate supply.
a decrease in aggregate demand.
a decrease in long-run aggregate supply.
a decrease in short-run aggregate supply.
10
The aggregate supply curve shows the relationship between the aggregate price level and:
the aggregate unemployment rate.
aggregate output supplied.
aggregate employment.
the aggregate money supply.
11
The short run-shift from point A to point B could be caused by:
Decrease in price level
Decrease in taxes
Depreciation in the Dollar
Decrease in consumer spending
12
What could most likely cause this triple shift which led to increased LRAS?
Increase in Government Spending
increase in Consumer spending
increase in Investment spending
increase in Exports
13
The sum of Marginal Propensity to Consume and the Marginal Propensity to Save must equal:
1
.5
100
0
14
Which of the following will decrease aggregate demand?
decrease in price level
decrease in interest rates
decrease in income
decrease in resource prices
15
All of the following are shifters of aggregate demand EXCEPT:
income taxes
subsidies
interest rates
exchange rates
16
Assume consumers increase spending. What happens to PL and Output?
decrease, increase
decrease, decrease
increase, decrease
increase, increase
17
If the GOV wanted to reduce GDP by $40B and the MPS was .2 the government would have to raise taxes by:
$40B
$4B
$10B
$8B
18
The aggregate demand curve is downward sloping for all of the following reason EXCEPT
purchasing power decreases at higher price levels
Appreciated currency lowers net exports
wages and prices have a hard time adjusting downwards
interest rates rise as people save less of their incomes at higher PL
19
The short run in macroeconomic analysis is a period:
in which many production costs can be assumed to be fixed.
in which the unemployment rate is assumed constant.
in which wages become fully flexible.
in which interest rates are fixed.
20
The Long-Run shift from Point B to Point C could be caused by:
decrease in investment
decrease in taxes
decrease in wages and resource costs
inflationary expectations
21
Which of the following would likely cause the short-run aggregate supply curve to shift to the left?
An increase in consumer spending.
A decrease in the price of imported oil.
A decrease in consumer spending.
An increase in the price of imported oil.
22
Which of the following will Shift AD1 to AD2?
an decrease in interest rates
an increase in price level
an appreciated dollar
a decrease in incomes
23
As a result of the shift below:
unemployment will increase
aggregate demand will increase
output will increase
price level will increase
24
In this economy, unemployment is ___ the natural rate and output is ___ potential output.
above , below
above, above
below, above
below, below
25
The reason for the positive slope of the Short-Run Aggregate Supply Curve is
sticky-wages
interest rate effect
exchange rate effect
flexible prices
