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AP Macroeconomics - Unit 3 Exam Questions and Answers
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AP Macroeconomics - Unit 3 Exam Questions and Answers
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AP Macroeconomics - Unit 3 ExamQuestions and Answers
Aggregate iiDemand ii- iiAnswers ii-The iiquantity iidemanded iiof iiall iigoods iiand iiservices
iiat iidifferent iiprice iilevels, iiceteris iiparibus
Aggregate iiSupply ii- iiAnswers ii-The iiquantity iisupplied iiof iiall iigoods iiand iiservices iiat
iidifferent iiprice iilevels, iiceteris iiparibus
Automatic iiFiscal iiPolicy ii(Non-Discretionary iiFiscal iiPolicy) ii- iiAnswers ii-Changes iiin
iithe iigovernment iiexpenditures iiand/or iitaxes iithat iioccur iiautomatically iiwithout
ii(additional) iicongressional iiaction
Budget iiDeficit ii- iiAnswers ii-A iishortfall iiof iitax iirevenue iifrom iigovernment iispending
Contractionary iiFiscal iiPolicy ii- iiAnswers ii-Decrease iiin iigovernment iispending iiand/or
iiincrease iiin iitaxes iito iireduce iieconomic iigrowth
Crowding iiOut ii- iiAnswers ii-The iidecrease iiin iiprivate iiexpenditures iithat iioccurs iias iia
iiconsequence iiof iiincreased iigovernment iispending iior iithe iifinancing iineeds iiof iia
iibudget iideficit
Discretionary iiDemand-Side iiFiscal iiPolicy ii- iiAnswers ii-Deliberate iichanges iiof
iigovernment iiexpenditures iiand/or iitaxes iito iiachieve iiparticular iieconomic iigoals
Expansionary iiDemand-Side iiFiscal iiPolicy ii- iiAnswers ii-Increases iiin iigovernment
iiexpenditures iiand/or iidecreases iiin iitaxes iito iiachieve iiparticular iieconomic iigoals
Fiscal iiPolicy ii- iiAnswers ii-Changes iiin iigovernment iiexpenditures iiand/or iitaxes iito
iiachieve iieconomic iiefficiency
Inflationary iiGap ii- iiAnswers ii-The iicondition iiwhere iithe iiReal iiGDP iithe iieconomy iiis
iiproducing iiis iigreater iithan iithe iiNatural iiReal iiGDP iiand iithe iiunemployment iirate iiis
iiless iithan iithe iinatural iiunemployment iirate
Interest iiRate iiEffect ii- iiAnswers ii-The iichanges iiin iihousehold iiand iibusiness iibuying iias
iithe iiinterest iirate iichanges
, International iiTrade iiEffect ii(Net iiExport iiEffect) ii- iiAnswers ii-The iichange iiin iiforeign
iisector iispending iias iithe iiprice iilevel iichanges.
Marginal iiPropensity iito iiConsume ii(MPC) ii- iiAnswers ii-The iiratio iiof iithe iichange iiin
iiconsumption iito iithe iichange iiin iidisposable iiincome. ii
1 ii- iiMPS
Marginal iiPropensity iito iiSave ii(MPS) ii- iiAnswers ii-The iiratio iiof iithe iichange iiin iisaving
iito iithe iichange iiin iidisposable iiincome.
1 ii- iiMPC
Menu iiCosts ii- iiAnswers ii-The iicost iiof iichanging iiprices
Multiplier ii- iiAnswers ii-The iinumber iithat iiis iimultiplied iiby iithe iichange iiin iiautonomous
ii(new) iispending iito iiobtain iithe iioverall iichange iiin iitotal iispending
Public ii(National) iiDebt ii- iiAnswers ii-The iitotal iiamount iithe iifederal iigovernment iiowes
iiits iicreditors
Real iiBalance iiEffect ii- iiAnswers ii-The iichanges iiin iithe iipurchasing iipower iiof iidollar-
dominated iiassets iithat iiresults iifrom iia iichange iiin iithe iiprice iilevel
Recessionary iiGap ii- iiAnswers ii-The iicondition iiwhere iithe iiReal iiGDP iithe iieconomy iiis
iiproducing iiis iiless iithan iithe iiNatural iiReal iiGDP iiand iithe iiunemployment iirate iiis iigreat
iithan iithe iinatural iiunemployment iirate
Say's iiLaw ii- iiAnswers ii-Supply iicreates iiits iiown iidemand. iiProduction iicreates iidemand
iisufficient iito iipurchase iiall iigoods iiand iiservices iiproduced.
Short-Run iiEquilibrium ii- iiAnswers ii-The iicondition iithat iiexists iiin iithe iieconomy iiwhen
iithe iiquantity iidemanded iiof iiReal iiGDP iiequals iithe ii(short-run)quantity iisupplied iiof
iiReal iiGDP. iiShown iiby iiwhere iithe iiAD iicurve iiintersects iithe iiSRAS
Stagflation ii- iiAnswers ii-The iisimultaneous iioccurrence iiof iihigh iirates iiof iiinflation iiand
iiunemployment
Supply-Side iiFiscal iiPolicy ii- iiAnswers ii-Fiscal iipolicy iicentered iion iitax iireductions
iitargeted iito iiaggregate iisupply iiso iithat iireal iiGDP iiincreases iiwith iivery iilittle iior iino
iiinflation. iiThe iimain iijustification iiis iithat iilower iitaxes iion iiindividuals iiand iifirms
iiincrease iiincentives iito iiwork, iisave, iiinvest, iiand iitake iirisks
Autonomous iiChange iiin iiAggregate iiSpending ii- iiAnswers ii-Is iian iiinitial iirise iior iifall iiin
iiaggregate iispending iithat iiis iithe iicause, iinot iithe iiresult, iiof iia iiseries iiof iiincome iiin
iispending iichanges
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