AP Macroeconomics Review: Module 3 Aggregate Demand ...



1. Federal funds are:ernment tax receipts.B.loans between banks.ernment expenditures.D.bank deposits at the Federal Reserve.ernment transfer payments. 2. The discount rate is the interest rate the Fed charges on loans to:A.consumers.B.the federal government.C.state governments.D.banks.E.corporations. 3. The three main monetary policy tools are:A.interest rates, taxes, and transfers.B.currency, near-moneys, and the reserve ratio.C.deposit insurance, discount rate, and the money multiplier.D.open-market purchases, the discount rate, and the money multiplier.E.reserve requirements, the discount rate, and open-market purchases.4. To _______ the money supply, the Fed could ________.A.increase; lower the reserve requirementsB.decrease; lower the discount rateC.increase; raise the federal funds rateD.decrease; conduct open-market purchasesE.increase; lower income taxes.5. To _______ the money supply, the Fed could ________.A.increase; decrease the money multiplierB.decrease; lower the reserve requirementsC.increase; conduct open-market purchasesD.decrease; lower the discount rateE.increase; increase government spending.6. Suppose the Federal Reserve were to engage in open-market operations by buying $100 million of U.S. Treasury bills. Which of the following would be the end result of such an action?A.The money supply would stay the same.B.The money supply would decrease by $100 million.C.The money supply would increase by $100 million.D.The money supply would increase by more than $100 million.E.The money supply would increase, but by less than $100 million.Figure 17-1: Aggregate Demand7. Use the “Aggregate Demand” Figure 17-1. Using the accompanying figure, the quantity of output demanded if the price level is 120 is:A.$9 trillion.B.$10 trillion.C.$11 trillion.D.$12 trillion.E.$13 trillion.8. The negative relationship between the aggregate price level and aggregate output demanded gives the aggregate demand curve:A.an upward slope.B.a vertical slope.C.a horizontal slope.D.a downward slope.E.a U-shaped curve.9. The aggregate demand curve shows the relationship between the aggregate price level and:A.aggregate productivity.B.the aggregate unemployment rate.C.the aggregate quantity of output demanded by households, businesses, the government, and the rest of the world.D.the aggregate quantity of output demanded by businesses only.E.the aggregate quantity of goods and services consumed by households.10. According to the aggregate demand curve, when the aggregate price level _________, the quantity of _________.A.rises; aggregate output supplied fallsB.falls; aggregate output demanded fallsC.rises; aggregate output demanded fallsD.rises; aggregate output demanded does not changeE.falls; aggregate output supplied falls11. In general, an increase in the price level, all other things unchanged, causes:A.an upward movement along the aggregate demand curve.B.a downward shift of the aggregate demand curve.C.both a downward movement along the aggregate demand curve and a downward shift in the curve.D.no change in the purchasing power of assets.E.an upward shift of the aggregate demand curve.12. The aggregate demand curve is negatively sloped in part because of the impact of interest rates on:A.potential output. exports.C.consumption and investment.ernment purchases.E.productivity.13. The aggregate demand curve:A.slopes downward for the same reasons that an ordinary demand curve does.B.slopes downward in part because when the price level falls the real wealth of the public falls, and this induces people to change their consumption.C.slopes downward in part because as the price level falls the ability of households and firms to borrow cheaply increases.D.slopes upward, unlike an ordinary demand curve.E.is vertical, unlike an ordinary demand cure.14. If prices are constant, but there is an increase in the value of financial assets:A.aggregate supply shifts to the left.B.aggregate supply shifts to the right.C.aggregate demand shifts to the leftD.aggregate demand shifts to the right.E.there is a movement down the aggregate demand curve.15. Suppose that a presidential candidate who promised large personal income tax cuts is elected. Which of the following is most likely to occur?A.A decrease in short-run aggregate supply.B.A decrease in aggregate demand.C.An increase in short-run aggregate supply.D.An increase in aggregate demand.E.A movement down the aggregate demand curve.16. An increase in government spending on health care is likely to shift the:A.short-run aggregate supply curve to the right.B.short-run aggregate supply curve to the left.C.long-run aggregate supply curve to the left.D.aggregate demand curve to the left.E.aggregate demand curve to the right.17. A decrease in the money supply is likely to cause:A.an increase in money holdings, higher interest rates and a decrease in aggregate demand.B.an increase in money holdings, higher interest rates and an increase in aggregate demand.C.a decrease in money holdings, lower interest rates and a decrease in aggregate demand.D.a decrease in money holdings, lower interest rates and an increase in aggregate demand.E.a decrease in money holdings, higher interest rates and a decrease in aggregate demand.18. Raising income taxes shifts the:A.aggregate demand curve to the left.B.long-run aggregate supply curve to the left.C.aggregate demand curve to the right.D.short-run aggregate supply curve to the left.E.short-run aggregate supply curve to the right.19. Aggregate demand will decrease if:A.the aggregate price level falls. exports rises.C.productivity declines.D.the money supply increases.E.the government raises the tax rate.Figure 17-2: Shift of the Aggregate Demand Curve20. Use the “Shift of the Aggregate Demand Curve” Figure 17-2. A movement from point A on AD1 to point C on AD2 could have resulted from a(n):A.lower price level.B.higher price level.C.increase in the total quantity of consumer goods and services demanded at every price level.D.significant decrease in the income level of consumers.E.increase in the income tax rates. ................
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