AP Macro Test

Question 1

Change in consumer confidence

Answer 1

AD Shock

Question 2

Change in interest rates

Answer 2

AD Shock

Question 3

Change in income taxes

Answer 3

AD Shock

Question 4

Change in price of raw materials

Answer 4

SRAS Shock

Question 5

Change in quality/quantity of land or capital goods

Answer 5

LRAS Shock

Question 6

Change in government spending

Answer 6

AD Shock

Question 7

Change in inflationary expectations

Answer 7

SRAS Shock

Question 8

Change in natural rate of unemployment

Answer 8

LRAS Shock

Question 9

Change in nominal wages

Answer 9

SRAS Shock

Question 10

Change in wealth

Answer 10

AD Shock

Question 11

When there are high wages and high prices

Answer 11

stagflation

Question 12

stagflation

Answer 12

negative SRAS Shock

Question 13

A decrease in aggregate demand

Answer 13

recession

Question 14

recession

Answer 14

negative AD shock

Question 15

rise in aggregate level of prices

Answer 15

inflation

Question 16

inflation

Answer 16

rightward demand shift

Question 17

Marginal Propensity to consume (MPC)

Answer 17

change in consumer spending/change in disposable income

Question 18

Marginal propensity to save (MPS)

Answer 18

1-MPC

Question 19

Spending Multiplier

Answer 19

1/ (1-MPC)

Question 20

Tax Multiplier

Answer 20

-MPC/ (1-MPC)

Question 21

Total impact on AD =

Answer 21

Autonomous change in aggregate spending x spending or tax multiplier

Question 22

The use of either government spending or tax policy to stabilize the economy

Answer 22

fiscal policy

Question 23

Associate “long-run” with…

Answer 23

wages

Question 24

The AD curve is downward sloping because of

Answer 24

1. The real wealth effect
2. The exchange rate effect
3. The interest rate effect