AP Macroeconomics Exam Test Questions Verified Marking Scheme Current Update (Verified Pass)
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AP Macroeconomics
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AP Macroeconomics
AP Macroeconomics Exam Test Questions Verified Marking Scheme Current Update (Verified Pass)
aggregate demand curve - Answers - a curve depicting the relationship between real GDP demanded (i.e., expenditures) and the price level in the economy; the aggregate demand curve slopes downward from le...
AP Macroeconomics Exam Test
Questions Verified Marking Scheme
Current Update (Verified Pass)
aggregate demand curve - Answers -✔✔ a curve depicting the relationship between
real GDP demanded (i.e., expenditures) and the price level in the economy; the
aggregate demand curve slopes downward from left to right.
aggregate supply curve - Answers -✔✔ a curve defining the relationship between real
production and price level.
business cycles - Answers -✔✔ fluctuations in real GDP around the trend value; also
called economic fluctuations.
consumer surplus - Answers -✔✔ the difference between the maximum price a
consume is (or would be) willing to pay and the price he or she actually pays.
cost-push inflation - Answers -✔✔ inflation created when an increase in the costs of
production (wages or raw materials) shifts the short-run aggregate supply (AS) curve to
the left; tends to push prices up while reducing the level of real GDP at the same time
(stagflation).
cyclical unemployment - Answers -✔✔ unemployment that reflects changes in the
business cycle; the difference between the official unemployment rate & the natural rate
of unemployment.
demand-pull inflation - Answers -✔✔ inflation that follows from an increase in
aggregate demand, which will cause equilibrium real GDP (Y) to increase and the
equilibrium price level (P) to increase.
depreciation - Answers -✔✔ when the price of one currency falls relative to another
currency, the first currency has depreciated relative to the other one.
depression - Answers -✔✔ period in which a recession becomes prolonged and deep,
involving high unemployment.
elastic - Answers -✔✔ significantly responsive to a change in price.
exchange rate - Answers -✔✔ the price of a domestic currency in terms of a foreign
currency.
, expansion - Answers -✔✔ period in which the economy moves from a trough to a peak
and a real GDP is increasing; also called a boom.
expansionary fiscal policy - Answers -✔✔ enacted when the government deliberately
increases its deficit to stimulate the economy; the government increases its spending
(increases G), cuts taxes (decreases T), or both, and stimulates the economy by
expanding aggregate demand (AD).
expansionary monetary policy - Answers -✔✔ monetary policy methods by which the
Fed aims to increase the money supply and lower interest rates, thereby creating an
increase in output; in pursuit of expansionary policy goals, the Fed can lower the
required reserve ratio, lower the discount rate, or purchase government securities on
the open market.
expenditure approach - Answers -✔✔ a way of measuring the GDP by adding up all
spending on final goods and services during a given year.
fiscal policy - Answers -✔✔ changes, adjustments, and strategies that the governments
implements in spending or taxation to achieve particular economic goals.
frictional unemployment - Answers -✔✔ unemployment faced by workers who have lost
their jobs because of changing market (demand) conditions & who have transferable
skills; unemployment due to the natural frictions of the economy.
Gross Domestic Product - Answers -✔✔ the dollar value of production within a nation's
border.
Gross National Product - Answers -✔✔ the dollar value of production by a country's
citizens.
hyperinflation - Answers -✔✔ a very high rate of inflation, under which prices go up
very rapidly, often more than 1,000 percent in a year. This causes money to become a
poor store of value.
import quotas - Answers -✔✔ restrictions on the quantity of a good that can be
imported
inelastic - Answers -✔✔ not significantly responsive to changes in price.
inferior good - Answers -✔✔ a good for which there is less demand as income rises; a
good the demand for which falls as income rises and rises as income falls; consumer
income rises while demand decreases.
inflation - Answers -✔✔ an increase in the price level
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