AP Macro Unit 5 quiz

which of the follow graphs would follow an AD/AS graph at an economy in full employment after AS increase?

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According to the Long-Run Phillips curve, which of the following is true?

• The natural rate of unemployment is independent of inflation

• Unemployment increases with an increase in inflation

• Unemployment decreases with an increase in inflation

• Unemployment decreases with a decrease in inflation

When government spending causes an increase in real interest rates,

• gross private domestic investment will not change

• gross private domestic investment will experience crowding out

• gross private domestic investment will increase and cause economic growth

• gross private domestic investment will increase the amount of capital stock in an economy

Which of the following is true regarding budget deficits?

• budget deficits occur when imports are greater than exports

• budget deficits occur when tax revenues are greater than government expenditures

• budget deficits occur more often during an inflationary economic period

• the national debt is an accumulation of budget deficits and surpluses over time

A decrease in interest rates resulting in the increase in capital stock will likely cause which of the THREE following in the long run?

• Decrease in AD

• Increase in AD

• Decrease in SRAS

• Increase in SRAS

• Increase in LRAS

Increased labor productivity due to the steam engine invention created which of the following graph shifts?

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which of the following will occur in the short-run if the economy is at full employment and the central bank conducts an open market purchase of bonds?

• the long run Phillips Curve will shift to the right

• there will be movement to the right along a short-run Phillips Curve

• there will be movement to the left along a short-run Phillips Curve

• there will be movement to the left on a new short-run Phillips Curve

Which of the following policy choices represents a combination of fiscal and monetary policies designed to bring an economy out of a recession?

• decreasing both taxes and the money supply

• increasing both taxes and the money supply

• increasing government spending and targeting a lower federal funds rate

• decreasing government spending and targeting a higher federal funds rate

Which of the following sequence of events would occur if the Federal Reserve implemented contractionary policy?

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Assume that an economy is at full-employment. Policy makers wish to maintain the price level but encourage capital investment. Which combination (choose 2) would best achieve this goal?

• Fiscal Policy - contractionary

• Fiscal Policy - expansionary

• Monetary Policy - contractionary

• Monetary Policy - expansionary