AP Macroeconomics Exam Questions And
Answers
cyclical unemployment unemployment that reflects changes in the business cycle; the
difference between the official unemployment rate & the natural rate of unemployment.
demand-pull inflation inflation that follows from an increase in aggregate dem...
cyclical unemployment unemployment that reflects changes in the business cycle; the
difference between the official unemployment rate & the natural rate of unemployment.
demand-pull inflation 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 when the price of one currency falls relative to another currency, the first
currency has depreciated relative to the other one.
depression period in which a recession becomes prolonged and deep, involving high
unemployment.
elastic significantly responsive to a change in price.
exchange rate the price of a domestic currency in terms of a foreign currency.
, AP Macroeconomics Exam Questions And
Answers
expansion 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 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 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 a way of measuring the GDP by adding up all spending on final
goods and services during a given year.
fiscal policy changes, adjustments, and strategies that the governments implements in
spending or taxation to achieve particular economic goals.
, AP Macroeconomics Exam Questions And
Answers
frictional unemployment 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 the dollar value of production within a nation's border.
Gross National Product the dollar value of production by a country's citizens.
hyperinflation 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 restrictions on the quantity of a good that can be imported
inelastic not significantly responsive to changes in price.
inferior good 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.
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