3.7-3.9 AP Macro

Decreases in the stock market decrease AD by decreasing which of the following?

• Consumer wealth

• The price level

• Capital stock

• Interest rates

• Tax revenues

Which of the following would NOT cause a shift in AD?

• A reduction in income tax

• A reduction in interest rates

• An increase in government spending

• A fall in the cost of production

• A change in exports

Which of the following will shift AD to the right?

• A decrease in wealth

• Pessimistic consumer expectations

• Firms purchase capital stock

• Increased productivity of workers

• Consumer income abroad decreases

Which of the following will shift the AS curve?

• A change in nominal wages

• A decrease in personal income taxes

• A change in government spending

• An increase in interest rates

• A change in price level

Which of the following will cause a negative supply shock?

• A technological advance

• An increase in productivity

• An increase in oil prices

• A decrease in nominal wages

• Government regulations are removed

During stagflation, the price level will ____ and real GDP will ___.

• decrease; increase

• decrease; decrease

• increase; increase

• increase; decrease

• stay the same; decrease

An economy at long-run AS is operating at:

• full employment

• less than full employment

• greater than full employment

• high cyclical unemployment

• greater than the natural rate of unemployment

Assume that 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 following ways?

FIRST PART IS PRICE LEVEL AND SECOND PART IS REAL GDP

• INCREASE INCREASE

• INCREASE DECREASE

• DECREASE INCREASE

• DECREASE DECREASE

An increase in the wealth of consumers will likely cause price level and unemployment to change in which of the following ways?

NOTE: 1ST PART OF ANSWER IS PRICE LEVEL, 2ND PART IS UNEMPLOYMENT

• INCREASE INCREASE

• INCREASE DECREASE

• INCREASE STAY THE SAME

• DECREASE DECREASE

According to classical economists, which of the following will occur to move this economy to long-run equilibrium

• Autonomous consumption will cause aggregate demand to increase

• Consumer spending will increase shifting aggregate demand to the right

• Deficit government spending should be used to shift aggregate demand to the right

• Wages will decrease causing aggregate supply to increase