AP Econ Unit 3 Exam
Quiz by Mark Stegall
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40 questions
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- Q1Part of the reason that aggregate demand is downward sloping is becausethere is a direct relationship between price level and the real GDP demandedlower price levels increase the demand for consumer goodslower price levels cause real interest rates to increase and increase investmenthigher price levels decrease the purchasing power of money which decreases the quantity of consumption30s
- Q2An increase in which of the following will decrease aggregate demand?Price levelReal interest ratesConsumer wealthNet exports30s
- Q3A change in which of the attached would increase the short-run aggregate supply curve?III, III, and IVII and IVII onlyI, II, and IV30s
- Q4Assume Canada imports products from the United States. A large decrease in the Canadian incomes will cause the United States price level and real GDP to change in which of the ways.Increase Price Level . Increase Real GDPDecrease price level . Decrease Real GDPPrice Level Stay the Same . Real GDP Stay the sameIncrease Price level . Decrease Real GDP30s
- Q5An increase in the wealth of consumers will likely cause price level and unemployment to change in which of the following ways?Increase price level . Unemployment stays the sameDecrease price level . Increase unemplymentIncrease price level . Decrease UnemploymentDecrease price level . Decrease unemployment30s
- Q6A decrease in the price of inputs will result in which of the following in the short run?An increase in aggregate demand and an increase in price levela Decrease in aggregate demand and a decrease in price levelAn increase in short-run aggregate supply and a decrease in price levelAn increase in short-run aggregate supply and an increase in long-run aggregate supply30s
- Q7All of the following are true regarding the concept of the long-run except?An economy at long-run equilibrium has full employmentPrice levels generally increases as rightward shifts in aggregate demand move closer toward the long-runIn the long-run, wages and resource prices increase as price level increasesAn economy cannot produce more output then what can be produced in the long-run30s
- Q8Refer to the graph above. Assume this economy is currently producing at Q1 with a price level of PL1. Which of the following will most likely occur as the economy adjusts to long-run equilibrium?Aggregate supply will shift left since workers will be laid offAggregate demand will shift left as government spending decreasesAggregate demand will shift left as consumer spending fall due to inflationLRAS will shift right resulting in economic growth30s
- Q9Assume an economy is at full-employment equilibrium when a negative supply shock occurs. All of the following will occur in the short-run exceptA decrease in real outputA decrease in aggregate demandStagflationAn increase in price level30s
- Q10According to classical economists, which of the following will occur to move this economy to long-run equilibriumDeficit government spending should be used to shift aggregate demand to the rightConsumer spending will increase shifting aggregate demand to the rightWages will decrease causing aggregate supply to increaseSticky wages will prevent wages from falling requiring the need for government action30s
- Q11All of the following are true regarding the horizongal protion of the short-run aggregate supploy cure exceptIt suggests that increases in aggregate demand can occur without increasing price levelIt is used by Keynesian economists to show that wages are not flexibleIt most likely occurs when an economy is in a recessionIt occurs when an economy is at the Natural Rate of Unemployment30s
- Q12According to the short-run Phillips curve, an increase in inflation will accompanya decrease in net exportsa recessionan increase in interest ratesa decrease in unemployment30s
- Q13Which of the following is true regarding the Phillips curve?The long-run Phillip curve shows the trade-off between unemployment and inflationThe long-run Phillips curve shows the direct relationship between nominal interest rates and inflationThe short-run Phillips curve shifts right when aggregate supply shifts leftThe short-run Phillips curve shifts left when aggregate supply shifts left30s
- Q14Which of the following is an example of epansionary fiscal policy?An increase in the money supply to decrease interest ratesA decrease in government expenditures on public works programsA decrease in the money supply by an increase in the reserve requirementA decrease in personal income tax rates30s
- Q15Which of the following is the best example of a non-discretionary fiscal policy to combat demand-pull inflation?Decrease in government spending on national defenseCrowding outA progressive income tax systemIncrease in the federal funds rate30s
