AP Macroeconomics: Unit 3 Progress Check MCQ Questions And Answers
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AP Macroeconomics
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AP Macroeconomics
AP Macroeconomics: Unit 3 Progress Check
MCQ Questions And Answers
It is a curve that shows the level of spending by consumers, businesses, the government, and the
foreign sector at different price levels.
Correct. The aggregate demand curve describes the relationship between the price level ...
AP Macroeconomics: Unit 3 Progress Check
MCQ Questions And Answers
It is a curve that shows the level of spending by consumers, businesses, the government, and the
foreign sector at different price levels.
Correct. The aggregate demand curve describes the relationship between the price level and
quantity of goods and services demanded by households, firms, the government, and the rest of
the world. Which of the following best describes the aggregate demand curve?
At a lower price level, domestic goods will become less expensive compared to foreign goods,
which causes an increase in spending on domestic goods.
Correct. The three reasons the aggregate demand curve has a negative slope are the wealth effect,
the interest rate effect, and the exchange rate effect. At a lower price level, domestic goods will
become relatively cheaper compared to foreign goods, exports increase, and spending on
domestic goods increases. This is the exchange rate effect. Which of the following
explains the relationship between the price level and real output along the aggregate demand
curve?
There will be a rightward shift in the AD curve.
, AP Macroeconomics: Unit 3 Progress Check
MCQ Questions And Answers
Correct. Aggregate demand is the sum of four components: consumption spending (C),
investment spending (I), government spending (G), and net exports. An increase in CC, II, G or
net exports will increase AD. Therefore the increase in government spending will shift the AD
curve to the right. The government of Euroland is considering increasing government
spending to avoid a recession. What is the most likely effect on aggregate demand in Euroland?
Real output will increase by a maximum of $400 billion.
Correct. Real output will increase by a maximum of $400 billion. The maximum change in real
output is determined by multiplying the spending multiplier by the amount of the change in
government spending. The spending multiplier is equal to (1/(1−MPC=)= 1/(1-.75)=4 Therefore,
real output will increase by a maximum of $100 billion×4=$400 billion. Assume the
marginal propensity to consume is 0.75. What will happen if government spending increases by
$100 billion?
A greater-than-one-dollar increase in aggregate demand for goods and services
Correct. A one-dollar change in autonomous expenditure leads to a greater-than-one-dollar
increase in aggregate demand for goods and services. According to the expenditure
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