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AP Macroeconomics Unit 3 Progress Check MCQ Exam Questions and Answers
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AP Macroeconomics Unit 3 Progress Check MCQ Exam Questions and Answers
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AP Macroeconomics: Unit 3 ProgressCheck MCQ Exam Questions and
Answers
It iiis iia iicurve iithat iishows iithe iilevel iiof iispending iiby iiconsumers, iibusinesses, iithe
iigovernment, iiand iithe iiforeign iisector iiat iidifferent iiprice iilevels.
Correct. iiThe iiaggregate iidemand iicurve iidescribes iithe iirelationship iibetween iithe iiprice
iilevel iiand iiquantity iiof iigoods iiand iiservices iidemanded iiby iihouseholds, iifirms, iithe
iigovernment, iiand iithe iirest iiof iithe iiworld. ii- iiAnswers ii-Which iiof iithe iifollowing iibest
iidescribes iithe iiaggregate iidemand iicurve?
At iia iilower iiprice iilevel, iidomestic iigoods iiwill iibecome iiless iiexpensive iicompared iito
iiforeign iigoods, iiwhich iicauses iian iiincrease iiin iispending iion iidomestic iigoods.
Correct. iiThe iithree iireasons iithe iiaggregate iidemand iicurve iihas iia iinegative iislope iiare
iithe iiwealth iieffect, iithe iiinterest iirate iieffect, iiand iithe iiexchange iirate iieffect. iiAt iia iilower
iiprice iilevel, iidomestic iigoods iiwill iibecome iirelatively iicheaper iicompared iito iiforeign
iigoods, iiexports iiincrease, iiand iispending iion iidomestic iigoods iiincreases. iiThis iiis iithe
iiexchange iirate iieffect. ii- iiAnswers ii-Which iiof iithe iifollowing iiexplains iithe iirelationship
iibetween iithe iiprice iilevel iiand iireal iioutput iialong iithe iiaggregate iidemand iicurve?
There iiwill iibe iia iirightward iishift iiin iithe iiAD iicurve.
Correct. iiAggregate iidemand iiis iithe iisum iiof iifour iicomponents: iiconsumption iispending
ii(C), iiinvestment iispending ii(I), iigovernment iispending ii(G), iiand iinet iiexports. iiAn
iiincrease iiin iiCC, iiII, iiG iior iinet iiexports iiwill iiincrease iiAD. iiTherefore iithe iiincrease iiin
iigovernment iispending iiwill iishift iithe iiAD iicurve iito iithe iiright. ii- iiAnswers ii-The
iigovernment iiof iiEuroland iiis iiconsidering iiincreasing iigovernment iispending iito iiavoid iia
iirecession. iiWhat iiis iithe iimost iilikely iieffect iion iiaggregate iidemand iiin iiEuroland?
Real iioutput iiwill iiincrease iiby iia iimaximum iiof ii$400 iibillion.
Correct. iiReal iioutput iiwill iiincrease iiby iia iimaximum iiof ii$400 iibillion. iiThe iimaximum
iichange iiin iireal iioutput iiis iidetermined iiby iimultiplying iithe iispending iimultiplier iiby iithe
iiamount iiof iithe iichange iiin iigovernment iispending. iiThe iispending iimultiplier iiis iiequal
, iito ii(1/(1−MPC=)= ii1/(1-.75)=4 iiTherefore, iireal iioutput iiwill iiincrease iiby iia iimaximum iiof
ii$100 iibillion×4=$400 iibillion. ii- iiAnswers ii-Assume iithe iimarginal iipropensity iito
iiconsume iiis ii0.75. iiWhat iiwill iihappen iiif iigovernment iispending iiincreases iiby ii$100
iibillion?
A iigreater-than-one-dollar iiincrease iiin iiaggregate iidemand iifor iigoods iiand iiservices
Correct. iiA iione-dollar iichange iiin iiautonomous iiexpenditure iileads iito iia iigreater-than-
one-dollar iiincrease iiin iiaggregate iidemand iifor iigoods iiand iiservices. ii- iiAnswers ii-
According iito iithe iiexpenditure iimultiplier, iiif iithe iimarginal iipropensity iito iiconsume iiis
iigreater iithan iizero, iia iione-dollar iichange iiin iiautonomous iiexpenditures iiwill iiresult iiin
iiwhich iiof iithe iifollowing?
MPC=0.60 ii, iiMPS=0.40
Correct. iiThe iimarginal iipropensity iito iiconsume iiis iithe iichange iiin iiconsumption
iispending iidivided iiby iithe iichange iiin iidisposable iiincome. iiThe iisum iiof iithe iimarginal
iipropensity iito iiconsume iiand iimarginal iipropensity iito iisave iiis iiequal iito iione. iiThe
iichange iiin iiconsumption iispending iiis ii$600 iiand iithe iichange iiin iidisposable iiincome iiis
ii$1,000. iiTherefore, iithe iimarginal iipropensity iito iiconsume iiis ii$600/$1,000=0.6 iiand
iithe iimarginal iipropensity iito iisave iiis ii1−0.6=0.4 ii- iiAnswers ii-Using iithe iidisposable
iiincome iiand iiconsumption iidata iiin iithe iitable iiabove, iicalculate iithe iivalue iiof iithe
iimarginal iipropensity iito iiconsume ii(MPC) iiand iithe iimarginal iipropensity iito iisave
ii(MPS).
There iiwill iibe iian iiupward iimovement iialong iithe iishort-run iiaggregate iisupply iicurve
iiand iireal iioutput iiwill iiincrease.
Correct. iiThe iiincrease iiin iithe iiprice iilevel iiresults iiin iian iiupward iimovement iialong iithe
iishort-run iiaggregate iisupply iicurve iito iia iihigher iireal iioutput iilevel. ii- iiAnswers ii-In iian
iieconomy iiwhere iiwages iiand iiprices iiare iisticky, iiwhich iiof iithe iifollowing iiwill iihappen
iias iia iiresult iiof iian iiincrease iiin iithe iiprice iilevel?
It iiwill iicause iithe iiSRAS iicurve iito iishift iileftward.
Correct. iiThe iitariff iiwill iiincrease iithe iicosts iiof iiproduction iiand iishift iithe ii(SRAS) iicurve
iito iithe iileft. ii- iiAnswers ii-The iiimposition iiby iithe iiUnited iiStates iiof iia iitariff iion iiimported
iisteel iifrom iithe iiEuropean iiUnion iiwill iilikely iihave iiwhat iiimpact iion iithe iishort-run
iiaggregate iisupply ii(SRAS) iicurve iiin iithe iiUnited iiStates?
An iiincrease iiin iithe iiprice iilevel iiwill iiincrease iiprofits iiand iiproduction.
Correct. iiWith iifixed iinominal iiwages, iian iiincrease iiin iithe iiprice iilevel iiwill iiincrease
iiprofits, iito iiwhich iifirms iirespond iiby iihiring iimore iiworkers iiand iiincreasing iiproduction.
ii- iiAnswers ii-If iinominal iiwages iiare iifixed iiby iilabor iicontracts, iithen iiwhich iiof iithe
iifollowing iiexplains iiwhy iithe iiaggregate iisupply iicurve iiis iiupward iisloping?
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