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AP Macro Unit 7- Aggregate Demand and Aggregate Supply + Phillips Curve version 2 Flashcards | StudBud
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AP Macro Unit 7- Aggregate Demand and Aggregate Supply + Phillips Curve version 2
AP Macro Unit 7- Aggregate Demand and Aggregate Supply + Phillips Curve version 2
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1
What do supply-side policies suggest?
The supply outweighs the demand in an economy
The economy can expand without inflation
Kanye West
The economy and inflation are linked
2
Which of the following pairs of fiscal actions are complementary contractionary policies?
An increase in taxes and a decrease in government spending
Selling bonds and decreasing government spending
Selling bonds and increasing taxes
Buying bonds and increasing government spending
3
What will shift SRAS left?
An increase in consumption
An increase in net exports
An increase in firm investment
An increase in wages
4
Which of the following shows stagflation on the AS-AD model?
Graph: LRAS shifted in
Graph: AD has shifted in
Graph: SRAS has shifted in
Graph: SRAS has shifted out
5
Which of the following monetary policies will shift the AD curve right?
Selling bonds
Buying bonds
Raising the discount rate
Lowering the discount rate
6
An increase in government spending will shift the AD curve
Left
Right
7
Which of the following explains why AD is upward-sloping?
None of the above
Exchange-Rate Effect
Interest Rate Effect
Wealth Effect
8
The government spends 10 billion dollars and the MPS is 0.2. Potential GDP growth will be
25 billion dollars
50 billion dollars
5 billion dollars
50 billion yen
9
Which of the following will shift the AD curve right?
An increase in investment
A decrease in net exports
A decrease in consumption
An increase in government spending
10
What is part of the natural unemployment rate?
Natural Unemployment
Frictional and Structural Unemployment
Frictional and Cyclical Unemployment
Structural and Frictional Unemployment
11
Which of the following can shift SRPC right?
An increase in inflationary expectations
An increase in wages
A decrease in net exports
An increase in unemployment
12
Which of the following is a supply shock that will shift SRAS right?
An increase in the marginal propensity to consume
A decrease in technological efficiency
A discovery of unimportant natural resources
A discover of important natural resources
13
The Fed buys bonds one day. Which of the following situations can MOST LIKELY explain why?
The economy is experiencing an inflationary gap
The economy is experiencing a recessionary gap
The Fed needs it for investment purposes
The government wants to sell bonds
14
Which of the following explains why SRAS is upward-sloping?
Wealth Effect
Interest Rate Effect
Misperceptions Theory
Sticky Wage Theory
15
What is on the y-axis of the AD-AS Model?
Inflation
Real GDP
Price Level
Unemployment
16
Which of the following will shift SRPC left?
An increase in firm productivity
An increase in consumption
An increase in net exports
An increase in wages
17
What is on the x-axis of the AD-AS Model?
Unemployment
Real GDP
Inflation
Nominal GDP
18
What shifts the AD curve?
Factors affecting inflation
Factors affecting GDP
Factors affecting Kanye West
Factors affecting unemployment
19
Stagflation is defined as
Falling output, falling prices
Rising unemployment and inflation
Rising prices, falling output
Falling prices, rising inflation
20
When AD shifts right, what happens to the SRPC?
SRPC shift right
SRPC shift left
Movement down the SRPC
Movement up the SRPC
21
If the government wants to stimulate an economy with an MPC of 0.75, they should ideally
Increase government spending by 40 billion dollars
Lower taxes by 40 billion dollars
22
Which of the following can lead to a decrease in AD?
An increase in net exports
A decrease in exports
An increase in imports
An increase in exports
23
In the long run, unemployment on the Philipps Curve
Goes to LRAS
Goes to AD
Goes to SRAS
Goes to LRPC
24
An expansionary policy would shift AD ____, a contractionary policy would shift AD __________
Out, Out
Out, In
Up, Down
In, Out
25
Which of the following policies are complementary expansionary policies?
Increasing government spending and buying bonds
Buying bonds and raising taxes
Selling bonds and lowering taxes
Increasing government spending and selling bonds
