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AP Macro Unit 3 Review Flashcards | StudBud
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AP Macro Unit 3 Review
AP Macro Unit 3 Review
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Unit III AP Macroeconomics
Flashcards
35 cards
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Practice quiz
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Host live
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Questions
35
Answers
1
If the MPC = .8, what is the tax multiplier?
5
4
10
2
2
If the MPC = .5, what is the tax multiplier?
10
1
5
2
3
What would happen to output in the long-run if nominal wages increased?
it would decrease
It would stay the same
it would increase
4
Stagflation...
causes lower pricelevels with higher unemployment and output
causes lower price levels, unemployment, and output.
causes higher price levels, unemployment, and lower output.
causes higher price levels, unemployment, and output.
5
What happens to the price level during a positive demand shock?
increases
decreases
6
The model below demonstrates:
negative demand shock
positive supply shock
positive demand shock
negative supply shock
7
Which of these is NOT a correct match of fiscal policy and impact on AD-AS model?
The government decreases income taxes, AS shifts right
The government raises income taxes, AD shifts left
The government increases transfer payments, AD shifts right
The government increases defense spending, AD shifts right
8
If the MPC = .9, what is the spending multiplier?
10
1
5
2
9
What will happen to the unemployment rate if the government raises income taxes?
It will stay the same
It will increase
It will decrease
10
Gov. increases spending by borrowing, driving up IRs. Correspondingly, these higher IRs lead to less private investment.
The Real Wealth Effect
Crowding Out Effect
The Lag Effect
The Net Export Effect
11
What happens to the price level during a negative supply shock?
decreases
increases
12
What happens to real wages as a consequence of cost-push inflation?
They stay the same, as costs are fixed in the short-term
We don't know enough to answer
They go down
They go up
13
The model below demonstrates:
negative supply shock
negative demand shock
positive demand shock
positive supply shock
14
Which of these would NOT cause a positive supply shock?
Finding new resources
New technology
<p>Increased education in a labor force</p>
A rise in input prices
15
What happens to real wages as a consequence of demand-pull inflation?
They stay the same, as they are fixed in the short-term
They go up by an unspecified amount
They go up by the same amount as the price level
They go down
16
What happens to the price level during a positive supply shock?
decreases
increases
17
Maria's income increases from $600 to $650 and consumption goes from $480 to $520, what's MPC?
$40
.8
.2
$50
18
How much would a government have to spend to close a$50 Billion recessionary gap? MPC=.5
25 Billion
100 Billion
None of these, idiot!
50 Billion
19
Government raises income taxes by $50, increases spending by $50. How would it impact AD-AS?
AD would shift slightly to the right
It wouldn't they cancel each other out
Government policy cannot influence the AD-AS
AD would shift slightly to the left
20
How much would you need to cut taxes by to close a $100 billion recessionary gap?MPC= .8
50 Billion
100 Billion
25 Billion
20 Billion
21
What happens to the price level during a negative demand shock?
increases
decreases
22
What would happen to real GDP, price level, and unemployment if the price of oil rose?
Real GDP - down, Price level - up, unemployment - up
Real GDP - up, Price level - up, unemployment - down
Real GDP -down, price level - down, unemployment - up
Real GDP - down, price level - down, unemployment - down
23
What happens to the output level during a positive demand shock?
decreases
increases
24
Which of the following statements is true about actual employment?
It cannot exceed full employment
It is below full employment in a recession
It must equal full employment
It exceeds full employment in a recession
25
If the MPC = .0, what is the spending multiplier?
10
1
5
2
26
Combination of inflation and stagnating aggregate output:
inflation
recession
depression
stagflation
27
The model below demonstrates:
negative supply shock
positive demand shock
positive supply shock
negative demand shock
28
The model below demonstrates:
recessionary gap
inflationary gap
29
What happens to the output level during a negative demand shock?
increases
decreases
30
The model below demonstrates:
inflationary gap
recessionary gap
31
Which of the following will occur in the long-run in an inflationary gap?
All of these will occur.
Ultimately, wages will rise, causing SRAS to shift back left
Ultimately, the government will increase spending to fix it.
Ultimately, wages will fall,causing SRAS to shift back right
32
Which of these would be most likely to cause stagflation?
An increase in the minimum wage
All of these would cause stagflation
A decrease in government spending
Increased education in the workforce
33
Why is the aggregate supply curve upward sloping?
Sticky Wages/Prices
The Law of Supply
All of these
<p>Consumers demand more at higher price levels</p>
34
What would happen to real gdp, price level, and unemployment if productivity increased?
Real GDP - up, Price Level - down, Unemployment - down
Real GDP - up, Price Level - Up, Unemployment - Up
Real GDP - down, Price level - up, Unemployment - Up
Real GDP - up, Price Level - up, Unemployment - down
35
Which of these does NOT explain why the aggregate demand curve is downward sloping
The Interest Rate Effect
The Real Balance Effect
The Law of Demand
The Net Export Effect
