AP Macroeconomics Unit 3 HHS - Assignment Essays

question

Aggregate demand may be measured by adding

answer

c. Consumption, Investment, government spending, and net exports

question

Which of the following would most likely cause a rightward shift in an economy's aggregate supply curve?

answer

c. An across the board reduction of wages in the manufacturing sector

question

According to the graph above, which of the following statements about the economy is true?

answer

e. Wages will eventually decrease, restoring full employment in the long run.

question

Assume that the marginal propensity to consume is 0.90. As a result of an increase in the tax rates, the government collects an additional $20 million. What will be the impact on gross domestic product?

answer

e. Wages will eventually decrease, restoring full employment in the long run.

question

The aggregate demand curve assumes that

answer

d. changes in the price level affect real wealth

question

An increase in the purchases of newly constructed houses will result in which of the following?

answer

b. Aggregate demand will increase as a result of an increase in investment spending.

question

Investment in physical capital is most likely to occur as a result of an increase in

answer

c. business confidence

question

8. Which of the following will shift the aggregate demand curve to the right?

answer

d. Increased spending by businesses on computers

question

Assume that the marginal propensity to consume is 0.8. If the government increases its purchases of goods and services by $200 and exports decline by $50, at most the equilibrium level of income will

answer

d. increase by $750

question

A change in taxes or a change in government transfers affects consumption through a change in:

answer

c. disposable income.

question

An economy is currently producing $250 billion of output. The full-employment output is $260 billion, and the marginal propensity to consume is 0.75. Assuming no crowding out and a horizontal aggregate supply curve, what level of additional spending is necessary to achieve full
employment?

answer

a. $2.5 billion

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Thailand and Malaysia are trading partners. If the price level in Thailand decreases relative to the price level in Malaysia, what will happen to Thailand's exports to Malaysia and Thailand's aggregate demand?

answer

b. Increase Increase

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If the marginal propensity to save is 0.25, a $15 billion increase in government spending will lead to an increase in national income by a maximum of

answer

a. $60 billion

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Assume that the marginal propensity to consume is 0.75, net exports decline by $10 billion, and government spending increases by $20 billion. Given that there is no crowding out, the equilibrium gross domestic product can increase by a maximum of

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c. $40 billion

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Assume that Canada imports products from the United States. A large decrease in the Canadian incomes will cause the United States net exports, price level and real GDP to change in which of the following ways in the short run?

answer

E. Net Exports Decrease, Price Level Decrease, Real GDP Decrease

question

The multiplier effect of changes in government transfer payments is equal to:

answer

e. the value of the tax multiplier

question

If wages are sticky, which of the following policies will be the most effective in raising real gross domestic product to the full-employment level?

answer

d. An increase in government spending

question

The long-run aggregate supply curve is vertical because

answer

a. Nominal wages will always adjust to changes in the price level

question

If a change in aggregate demand results in a recession, the price level and real output will change in which of the following ways in the short run

answer

e. Price level Decrease, Real Output Decrease

question

Assume a country's economy is currently in long-run equilibrium. What is the long-run effect of an increase in aggregate demand?

answer

d. An increase in the price level

question

Which of the following is an assumption underlying an upward-sloping short-run aggregate supply curve?

answer

d. Wages are sticky.

question

Which of the following will cause aggregate supply to increase in Country X?

answer

b. The discovery of low-cost alternative sources of energy

question

Suppose the government increases taxes by more than is necessary to close an inflationary gap. Which of the following would most likely be the end result?

answer

b. The economy could move into a recession.

question

24. Automatic stabilizers are a part of

answer

d. Nondiscretionary fiscal policy

question

Which of the following is true about both the long-run aggregate supply curve and the production possibilities curve?

answer

d. Both curves represent the maximum sustainable capacity given the economy's resources.

question

Which of the following would indicate that economic growth has occurred?

answer

b. The long-run aggregate supply curve shifts to the right.

question

Assume a country's economy is currently in long-run equilibrium. What is the long-run effect of an increase in aggregate demand?

answer

d. An increase in the price level

question

Assuming no government policies, which of the following will occur in the long run if the actual unemployment rate exceeds the natural rate of unemployment?

answer

c. Wages will fall.

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The graph above shows the macroeconomic conditions of Wattsonia. Many economists estimate that the natural rate of unemployment is 6 percent. If this is true and the current rate of unemployment is 5.1 percent, in what range of real gross domestic product is the economy currently producing?

answer

e. Greater than Y2

question

A major problem or concern with fiscal policy is

answer

e. All of the above

question

The intersection of the aggregate supply curve and the aggregate demand curve occurs at the economy's equilibrium level of

answer

c. real national output and the price level

question

When actual output is above potential output, in the absence of any monetary or fiscal policy:

answer

b. wages will increase, and the short-run aggregate supply curve will shift to the left.

question

Recession can be caused by

answer

d. a decrease in aggregate demand

question

When an economy is in equilibrium at potential gross domestic product, the
actual unemployment rate is

answer

d. equal to the natural rate

question

An economy is at full-employment equilibrium. If consumers and firms become more optimistic about future income and profits, which of the following will occur in the short run?

answer

c. Aggregate demand will shift rightward, increasing real output and the price level.

question

During a period of stagflation, a nation is most likely experiencing

answer

d. a decrease in short-run aggregate supply

question

An increase in which of the following will most likely cause an increase in aggregate demand and inflation in the short run?

answer

c. Government spending

question

Assume the government reduces its spending and raises income taxes in an effort to reduce the budget deficit. The most likely short-run result will be an increase in

answer

b. unemployment

question

Which of the following is a fiscal policy action aimed at reducing unemployment?

answer

b. Decreasing income taxes

question

Based on the graph above, demand-pull inflation is caused by a movement from

answer

c. AD1 to AD2

question

An economy is currently operating at the full-employment level of output. Which of the
following would result in a recessionary gap in the short run?

answer

a. An increase in the costs of production

question

An unanticipated decrease in aggregate demand will most likely cause the unemployment rate and the inflation rate to change in which of the following ways?

answer

b.Unemployment Increase, Inflation Decrease

question

In the graph above, AD denotes the aggregate demand curve, SRAS the short-run aggregate supply curve, and LRAS the long-run aggregate supply curve. If no policy action were taken, which of the following changes would move the economy to its long-run equilibrium?

answer

c. An increase in wages

question

Assume the economy is in a short-run equilibrium at point L. In the absence of any fiscal or monetary policy actions, what will happen in the long run?

answer

e. The SRAS curve will shift to the right, and the economy will be in long-run equilibrium at point K.

question

If the government implements expansionary fiscal policy, GDP will ______and price levels
will_______

answer

d. increase, increase

question

Which of the following statements is true about an expansionary fiscal policy?

answer

d. It increases aggregate demand.

question

According to the income and consumption shown above, the marginal propensity to consume is

answer

d) .75

question

A decrease in taxes will necessarily result in an increase in which of the following?

answer

e. Price levels

question

An inflationary gap could be reduced by

answer

c. an increase in the income tax rate

question

Automatic stabilizers can do which of the following?

answer

d. Cause tax revenues to decrease when gross domestic product (GDP) decreases and to increase when GDP increases

question

Which of the following will most likely occur if a government adopts an annually balanced budget rule that requires the government to eliminate any deficits or surpluses?

answer

d. The automatic stabilizing effect of fiscal policy will be eliminated.

question

Which of the following is an example of an automatic stabilizer?

answer

b. Progressive income taxes

1 of 52

question

Aggregate demand may be measured by adding

answer

c. Consumption, Investment, government spending, and net exports

question

Which of the following would most likely cause a rightward shift in an economy's aggregate supply curve?

answer

c. An across the board reduction of wages in the manufacturing sector

question

According to the graph above, which of the following statements about the economy is true?

answer

e. Wages will eventually decrease, restoring full employment in the long run.

question

answer

e. Wages will eventually decrease, restoring full employment in the long run.

question

The aggregate demand curve assumes that

answer

d. changes in the price level affect real wealth

question

An increase in the purchases of newly constructed houses will result in which of the following?

answer

b. Aggregate demand will increase as a result of an increase in investment spending.

question

Investment in physical capital is most likely to occur as a result of an increase in

answer

c. business confidence

question

8. Which of the following will shift the aggregate demand curve to the right?

answer

d. Increased spending by businesses on computers

question

Assume that the marginal propensity to consume is 0.8. If the government increases its purchases of goods and services by $200 and exports decline by $50, at most the equilibrium level of income will

answer

d. increase by $750

question

A change in taxes or a change in government transfers affects consumption through a change in:

answer

c. disposable income.

question

answer

a. $2.5 billion

question

answer

b. Increase Increase

question

If the marginal propensity to save is 0.25, a $15 billion increase in government spending will lead to an increase in national income by a maximum of

answer

a. $60 billion

question

answer

c. $40 billion

question

answer

E. Net Exports Decrease, Price Level Decrease, Real GDP Decrease

question

The multiplier effect of changes in government transfer payments is equal to:

answer

e. the value of the tax multiplier

question

If wages are sticky, which of the following policies will be the most effective in raising real gross domestic product to the full-employment level?

answer

d. An increase in government spending

question

The long-run aggregate supply curve is vertical because

answer

a. Nominal wages will always adjust to changes in the price level

question

If a change in aggregate demand results in a recession, the price level and real output will change in which of the following ways in the short run

answer

e. Price level Decrease, Real Output Decrease

question

Assume a country's economy is currently in long-run equilibrium. What is the long-run effect of an increase in aggregate demand?

answer

d. An increase in the price level

question

Which of the following is an assumption underlying an upward-sloping short-run aggregate supply curve?

answer

d. Wages are sticky.

question

Which of the following will cause aggregate supply to increase in Country X?

answer

b. The discovery of low-cost alternative sources of energy

question

Suppose the government increases taxes by more than is necessary to close an inflationary gap. Which of the following would most likely be the end result?

answer

b. The economy could move into a recession.

question

24. Automatic stabilizers are a part of

answer

d. Nondiscretionary fiscal policy

question

Which of the following is true about both the long-run aggregate supply curve and the production possibilities curve?

answer

d. Both curves represent the maximum sustainable capacity given the economy's resources.

question

Which of the following would indicate that economic growth has occurred?

answer

b. The long-run aggregate supply curve shifts to the right.

question

Assume a country's economy is currently in long-run equilibrium. What is the long-run effect of an increase in aggregate demand?

answer

d. An increase in the price level

question

Assuming no government policies, which of the following will occur in the long run if the actual unemployment rate exceeds the natural rate of unemployment?

answer

c. Wages will fall.

question

answer

e. Greater than Y2

question

A major problem or concern with fiscal policy is

answer

e. All of the above

question

The intersection of the aggregate supply curve and the aggregate demand curve occurs at the economy's equilibrium level of

answer

c. real national output and the price level

question

When actual output is above potential output, in the absence of any monetary or fiscal policy:

answer

b. wages will increase, and the short-run aggregate supply curve will shift to the left.

question

Recession can be caused by

answer

d. a decrease in aggregate demand

question

When an economy is in equilibrium at potential gross domestic product, the
actual unemployment rate is

answer

d. equal to the natural rate

question

An economy is at full-employment equilibrium. If consumers and firms become more optimistic about future income and profits, which of the following will occur in the short run?

answer

c. Aggregate demand will shift rightward, increasing real output and the price level.

question

During a period of stagflation, a nation is most likely experiencing

answer

d. a decrease in short-run aggregate supply

question

An increase in which of the following will most likely cause an increase in aggregate demand and inflation in the short run?

answer

c. Government spending

question

Assume the government reduces its spending and raises income taxes in an effort to reduce the budget deficit. The most likely short-run result will be an increase in

answer

b. unemployment

question

Which of the following is a fiscal policy action aimed at reducing unemployment?

answer

b. Decreasing income taxes

question

Based on the graph above, demand-pull inflation is caused by a movement from

answer

c. AD1 to AD2

question

An economy is currently operating at the full-employment level of output. Which of the
following would result in a recessionary gap in the short run?

answer

a. An increase in the costs of production

question

An unanticipated decrease in aggregate demand will most likely cause the unemployment rate and the inflation rate to change in which of the following ways?

answer

b.Unemployment Increase, Inflation Decrease

question

answer

c. An increase in wages

question

Assume the economy is in a short-run equilibrium at point L. In the absence of any fiscal or monetary policy actions, what will happen in the long run?

answer

e. The SRAS curve will shift to the right, and the economy will be in long-run equilibrium at point K.

question

If the government implements expansionary fiscal policy, GDP will ______and price levels
will_______

answer

d. increase, increase

question

Which of the following statements is true about an expansionary fiscal policy?

answer

d. It increases aggregate demand.

question

According to the income and consumption shown above, the marginal propensity to consume is

answer

d) .75

question

A decrease in taxes will necessarily result in an increase in which of the following?

answer

e. Price levels

question

An inflationary gap could be reduced by

answer

c. an increase in the income tax rate

question

Automatic stabilizers can do which of the following?

answer

d. Cause tax revenues to decrease when gross domestic product (GDP) decreases and to increase when GDP increases

question

Which of the following will most likely occur if a government adopts an annually balanced budget rule that requires the government to eliminate any deficits or surpluses?

answer

d. The automatic stabilizing effect of fiscal policy will be eliminated.

question

Which of the following is an example of an automatic stabilizer?

answer

b. Progressive income taxes

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