The given graph shows... ?

An inflationary gap of $10 Billion

If the federal government enacted expansionary fiscal policy, which option below would most likely result?

An increase in Output (real GDP)

As aggregate demand decreases... ?

Both price level and output decrease

Which of the following IS a determinant of Long Run Aggregate Supply (LRAS)?

Change in Quantity of Factors of Production

After the initial increase in AD, the given graph best shows... ?

An economy self-correcting back to Long-Run Equilibrium.

Which of the following best describes a problem that can arise with the use of Keynesian, pro-active fiscal policy?

All of the given choices are correct.

Which of the following is NOT an Aggregate Demand (AD) determinant?

Change in Input (Raw Material) Prices

Which of the following would most likely cause inflation?

A decrease in Short Run Aggregate Supply (SRAS)

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Econ (AP) - Macro - Unit 3

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Questions 20

Answers

1
The given graph shows... ?
A recessionary gap of $10 Billion
An inflationary gap of $10 Billion
A Short Run Equilibrium price level of 107
An economy in Long Run Equilibrium
2
Based on the visual, which phase of the Business Cycle is the given economy operating in?
expansionary
trough
peak
contractionary
3
With regards to employment, the given graph shows... ?
An economy that's booming and operating beyond full employment
An economy at full employment
An economy in recession, where unemployment is high
An economy with no unemployment whatsoever
4
If the federal government enacted expansionary fiscal policy, which option below would most likely result?
A decrease in Aggregate Demand (AD)
An increase in Short Run Aggregate Supply (SRAS)
An increase in Output (real GDP)
A decrease in Price Level
5
As aggregate demand decreases... ?
Both price level and output increase
Price level increases while output decreases
Price level decreases while output increases
Both price level and output decrease
6
If the federal government wished to fight high inflation, they should enact ___________ fiscal policy.
Contractionary
Monetary
Keynesian
Expansionary
7
The given graph shows... ?
Long Run Equilibrium
An increase in Price Level
A decrease in Real GDP
A change in Short Run Supply
8
Which of the following IS a determinant of Long Run Aggregate Supply (LRAS)?
Change in Nominal Wages
Change in Wealth
Change in Quantity of Factors of Production
Change in Monetary Policy
9
After the initial increase in AD, the given graph best shows... ?
Decreasing price level over time.
Contractionary policy bringing an economy back to Long-Run Equilibrium.
An economy self-correcting back to Long-Run Equilibrium.
A shift in Long-Run Aggregate Supply.
10
Which of the following best describes a problem that can arise with the use of Keynesian, pro-active fiscal policy?
Use of expansionary fiscal policy often leads to short term budget deficit.
There are "lag times" with fiscal policy which may prevent timely usage.
All of the given choices are correct.
Use of expansionary fiscal policy leads to the build up of long term debt.
11
According to the visual, the given economy is currently operating with a(n) _____________ gap.
positive output
expansionary
recessionary
marginal ouput
12
Which of the following would cause the Short Run Aggregate Supply (SRAS) Curve to shift as shown in the given graph?
An increase in worker productivity
An increase in nominal wages
A decrease in wealth
A decrease in taxes
13
Which of the following is NOT an Aggregate Demand (AD) determinant?
Change in Expectations
Change in Input (Raw Material) Prices
Change in Fiscal Policy
Change in Stock of Physical Inventory
14
Suppose MPS = .25. Calculate the tax multiplier.
-3
1/3
-1/3
3
15
In macroeconomics: if a variable is resistant to change, it can be referred to as _________.
Elastic
Sticky
Chunky
Chewy
16
In macroeconomics, what does MPC stand for?
Marginal Propensity to Calculate
Marginal Propensity to Consume
Multiplier Per Capita
Monetary Policy Calculator
17
An economy is experiencing an inflationary gap. Which option would most likely bring it back to Long Run Equilibrium?
Decreasing taxes
Increased wages
Increased investment spending
Decreased commodity prices
18
Which of the following would most likely cause inflation?
A decrease in Aggregate Demand (AD)
A decrease in Short Run Aggregate Supply (SRAS)
An increase in Short Run Aggregate Supply (SRAS)
An increase in Long Run Aggregate Supply (LRAS)
19
Which will result in a greater multiplier effect: a MPC of .8 or a MPC of .4?
.8
Trick question. Can not determine without knowing MPS.
Depends on if we're using expenditure multiplier formula or tax multiplier.
.4
20
Which of the following would cause the movement from Point A to Point B on the given graph?
An increase in price level
A decrease in government spending
A decrease in input (raw material) costs
An increase in land resources

Econ (AP) - Macro - Unit 3 Flashcards | StudBud