AP Macro Unit 3

Aggregates

100

What are the shifters of the aggregate demand curve?

Consumer Spending, Investment Spending, Government Spending, & Net Exports

200

What are the shifters of the aggregate supply curve?

resources cost/prices, actions of the government, productivity... and inflationary expectations

300

The government administers new subsidies to the farming market... what will shift and which direction?

Aggregate Supply & shifts to the right.

400

If operating in the intermediate range of the aggregate supply curve, an increase in aggregate demand results in what changes to PL and rGDP?

Price Level increases & rGDP increases

500

First person to the board to draw a correctly labeled AD-AS model showing the shifting result of an increase in technology while there exists a simultaneous increase in investment spending. (original graph + shifts)

...

Defintions

100

AD

Aggregate Demand is the total quantity of goods and services demanded at different price levels, composed of consumption, investment, government spending, and net exports.

200

SRAS

Short-Run Aggregate Supply is the total quantity of goods and services producers are willing to supply at different price levels in the short run, and it slopes upward because wages and input prices are sticky.

300

LRAS

Long-Run Aggregate Supply represents the economy’s maximum sustainable output at full employment, shown as a vertical line at potential GDP because prices and wages adjust in the long run.

400

Spending Multiplier 

The spending multiplier measures how much total output/GDP changes in response to an initial change in spending.

500

Fiscal Policy, give me two types, and tell me which of the two is more effective. 

Government Action --> Taxes and Spending, Spending --> more direct 

MPC & MPS

100

if MPC is 0.75, MPS = ?

0.25

200

If the MPC is 0.67, what is the spending multiplier?

~3

300

If consumption increases by $1,200 while disposable income increases by $3,600... what is the marginal propensity to save?

0.6666666

400

In the Keynesian aggregate-expenditures model, if the MPC is 0.75 and gross investment increases by $6 billion, equilibrium GDP will increase by ???

$24 billion

500

If the government enacts two fiscal policy changes of increasing spending by $30 billion while also simultaneously increasing taxes by the same amount... what is the multiplier value of BOTH multipliers... AND what is the total change in GDP? (oh and MPC = 0.75)

spending multiplier is 4, tax multiplier is 3, total change is +$30 billion in GDP.

Short, Long, Bing, Bong

100

What is an advantage of automatic stabilizers in fiscal policy?

They go into effect (automatically) without the passage of any new legislation.

200

Name two types of automatic stabilizers. 

Income Tax and Welfare Programs 

300

A decrease in real interest rates will cause what to shift which way?

Investment spending increases... so Aggregate Demand increases and shifts to the right.

400

A decrease in the wages and production cost will most likely cause the price level and real GDP to change HOW in the short-run?

Price Level decreases & Real GDP increases.

500

First person to the board to draw a correctly labeled graph of aggregate demand and supply showing the price level and real output for an economy that is currently operating below full employment level.

...

Mr.Latina

100

What's my favorite holiday? 

Christmas

200

Who is my favorite pokemon? 

Pikachu

300

What color and type of car do I drive? Bonus points for the model! 

Kia, White, Sportage

400

True or false! Mr.Latina won both the Wooden Spoon and the Triangle Pin in his senior year. 

False, just the spoon! 

500

What local Catholic School did I attend middle school at? 

St. Anns