AP Macroeconomics Exam Review questions
and answers
Movement on Short-Run Phillips Curve - Shift in AD (graph movement is in
opposite direction)
Shift of Short-Run Phillips Curve - Shift in SRAS (shift is in opposite direction)
Factors of Production - 1. Land
2. Labor
3. Capital
4. Technology
Shifters of Demand for Loanable Funds - 1. Incentive to Invest
2. Contractionary Fiscal Policy (to the right)
Shifters of Supply of Loanable Funds - 1. Incentive to Save
2. Monetary Policy
3. Expansionary Fiscal Policy (to the left)
Shifters of Money Supply - Monetary Policy
Federal Reserve Bank
,AP Macroeconomics Exam Review questions
and answers
Shifters of Money Demand - 1. Price Level
2. Income
3. Fiscal Policy
Shifters of Long-Run Aggregate Supply - Factors of Production
Shifters of Short-Run Aggregate Supply - 1. Factors of Production (LRAS)
2. Input Costs
3. Supply Shock
Shifters of Aggregate Demand - 1. GDP (or its components)
2. Monetary Policy
3. Fiscal Policy
PPC Graph - Illustrates the production possibilities of 2 products based on amount
of resources available
Demand and Supply Graph -
,AP Macroeconomics Exam Review questions
and answers
Business Cycle -
AD/AS Graph -
Money Market Graph -
Loanable Funds Graph -
GDP = C + I + G + Xn - The expenditure approach to measuring GDP correlates well
with aggregate demand (AD)
GDP = W + I + R + P - The income approach to measuring GDP correlates well with
aggregate supply
Calculating Nominal GDP - The quantity of various goods produced in a nation
times their current prices, added together.
GDP Deflator - Price index used to measure inflation
, AP Macroeconomics Exam Review questions
and answers
Inflation Rate via the CPI - (This year's CPI - Last year's CPI)/(Last year's CPI) x 100.
The inflation rate is the percentage change in the CPI from one period to the next.
Real Interest Rate - the interest rate corrected for the effects of inflation;
Unemployment Rate - 16 or older, actively seeking employment.
Money Multiplier - 1/RR where RR equals the required reserve ratio. Application:
an initial injection of $1,000 of new money into a banking system with a reserve
ratio of 0.1 will generate up to $1,000 x (10) = $10,000 in total money.
Quantity Theory Of Money - MV = PQ = Y. A monetarist's view that explains how
changes in the money supply (M) will affect the price level (P) and/or real output
assuming the velocity of money (V) is fixed in the short run.
MPC + MPS = 1 - The fraction of an increase in disposable income that is spent
(MPC) plus the fraction that is saved (MPS) must equal 1.
and answers
Movement on Short-Run Phillips Curve - Shift in AD (graph movement is in
opposite direction)
Shift of Short-Run Phillips Curve - Shift in SRAS (shift is in opposite direction)
Factors of Production - 1. Land
2. Labor
3. Capital
4. Technology
Shifters of Demand for Loanable Funds - 1. Incentive to Invest
2. Contractionary Fiscal Policy (to the right)
Shifters of Supply of Loanable Funds - 1. Incentive to Save
2. Monetary Policy
3. Expansionary Fiscal Policy (to the left)
Shifters of Money Supply - Monetary Policy
Federal Reserve Bank
,AP Macroeconomics Exam Review questions
and answers
Shifters of Money Demand - 1. Price Level
2. Income
3. Fiscal Policy
Shifters of Long-Run Aggregate Supply - Factors of Production
Shifters of Short-Run Aggregate Supply - 1. Factors of Production (LRAS)
2. Input Costs
3. Supply Shock
Shifters of Aggregate Demand - 1. GDP (or its components)
2. Monetary Policy
3. Fiscal Policy
PPC Graph - Illustrates the production possibilities of 2 products based on amount
of resources available
Demand and Supply Graph -
,AP Macroeconomics Exam Review questions
and answers
Business Cycle -
AD/AS Graph -
Money Market Graph -
Loanable Funds Graph -
GDP = C + I + G + Xn - The expenditure approach to measuring GDP correlates well
with aggregate demand (AD)
GDP = W + I + R + P - The income approach to measuring GDP correlates well with
aggregate supply
Calculating Nominal GDP - The quantity of various goods produced in a nation
times their current prices, added together.
GDP Deflator - Price index used to measure inflation
, AP Macroeconomics Exam Review questions
and answers
Inflation Rate via the CPI - (This year's CPI - Last year's CPI)/(Last year's CPI) x 100.
The inflation rate is the percentage change in the CPI from one period to the next.
Real Interest Rate - the interest rate corrected for the effects of inflation;
Unemployment Rate - 16 or older, actively seeking employment.
Money Multiplier - 1/RR where RR equals the required reserve ratio. Application:
an initial injection of $1,000 of new money into a banking system with a reserve
ratio of 0.1 will generate up to $1,000 x (10) = $10,000 in total money.
Quantity Theory Of Money - MV = PQ = Y. A monetarist's view that explains how
changes in the money supply (M) will affect the price level (P) and/or real output
assuming the velocity of money (V) is fixed in the short run.
MPC + MPS = 1 - The fraction of an increase in disposable income that is spent
(MPC) plus the fraction that is saved (MPS) must equal 1.
