AP Macroeconomics

Aggregate Demand

100

The Determinants of Aggregate Demand

What are Consumption, Gov Spending, Investment, and Net Exports?

200

This is the period of recovery after an economic downturn or trough on the business cycle.

What is Expansion?

300

These points represent productive efficiency on the PPC graph. 

What are points that are ON THE LINE? 

400

This is 6 consecutive months of falling GDP

What is a recession?

500

On the PPC graph, an increase in unemployment could be represented by a movement by

What moving from a point on the line to a point below the line? 

Economic Indicators

100

Formula for GDP

What is C+I+G+NX

200

This component makes up the largest percentage of GDP. 

What is Consumption? 

300

GDP is an imperfect measure because it doesn’t include

What is:

Quality of life

Non-market transactions

Volunteer work

400

This type of unemployment describes a person who is unemployed because of a mismatch between the quantity of labor supplied and the quantity of labor demanded. 

What is Structural Unemployment? 

500

This is the inflation rate from 2012 to 2013.

Year   CPI

2012   229.6

2013   233.0

What is 1.5%? 

(233.0 − 229.6)/229.6 × 100 = 1.5%

AS/AD

100

An unexpected event that shifts the short-run aggregate supply curve

What is a supply shock

200

Exists when short-run output is above potential output.

What is an inflationary gap

300

4-6% unemployment in the USA

What is the natural rate of unemployment

400

In the long-run, inflation and unemployment have this type of relationship

What is no relationship

500

This happens with no policy action to correct a recessionary or inflationary gap.

What is Long Run Self Adjustment?

Fiscal Policy

100

The Tax Multiplier formula

What is 

-MPC/MPS

OR

1 less than the spending multiplier

200

Fraction of an additional dollar of disposable income that is saved is ....

What is Marginal Propensity to Save

300

MPC is 0.8 and government increases taxes by $50 million. What will occur to Real GDP?

What is decrease by 200 million.

400

Government spending and taxation rules that cause fiscal policy to expand when the economy contracts and to contract when the economy expands.

What is automatic stabilizers.

500

Change in government purchases of goods and services is $20 million that leads to an increase of $200 million in Real GDP. What is the multiplier?

What is 10

Diagrams & Math

100

An increase in taxes have this effect on aggregate demand. Show this impact on a diagram

Decrease AD, shift it to the left. 

200

A PPC with constant opportunity cost

Linear diagram

300

An economy with cyclical unemployment

What is a recessionary gap AD/AS Model

400

If MPC is 0.5 and the government increases spending by $3 billion, this would be the change in real GDP. 

$6 billion

500

The GDP Deflator is 90 and Nominal GDP is $700 million. What is Real GDP? 

What is 777,777,777