AP Macroeconomics Unit 3 Progress Check

Which of the following best describes the aggregate demand curve?
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Suppose a nation opened its borders to the free flow of workers from other nations. How would this event likely affect the long-run aggregate supply (LRAS) curve and the production possibilities curve of the nation?Both curves would shift to the right.Suppose that the prices of labor and inputs to production are fixed in the short run but not in the long run. What is a consequence of this flexibility in the long run?The long-run aggregate supply curve is vertical and there is no trade-off between inflation and unemployment in the long run.Which of the following is true about the equilibrium real output in the aggregate demand-aggregate supply (AD-AS) model in the short run?Equilibrium real output can be above, equal to, or below full employment.Which of the following accurately describes the state of the macro-economy if it is operating at the intersection of the AD1 and SRAS2 curves?It is operating below full employment and is in a short-run but not at long-run equilibrium.Which of the following is true when an economy is operating at the intersection of the AD2 and SRAS2 curves?The economy is in short-run and long-run equilibrium.Assume that stock prices and home values have increased, raising household wealth. At the same time, productivity increased due to new technology. What is the likely short-run impact on the economy?Both the aggregate demand (AD) and the short-run aggregate supply (SRAS) curves shift right, resulting in a higher output level and indeterminate price level.Assume the economy of Country A is in long-run equilibrium. Which of the following will happen in the short run in Country A if one of its major trading partners, Country B, experiences a recession?Aggregate demand will decrease and the price level will decrease.Country X is currently in long-run macroeconomic equilibrium. If the country's economy experiences a significant increase in the price of energy, a major input in production, which of the following will occur in the short run?The short-run aggregate supply curve will shift to the left, and the actual rate of unemployment will exceed the natural rate of unemployment.Assume an economy is currently at full employment. Which of the following best describes the long-run adjustments that will occur in the economy following a negative aggregate demand shock with no government intervention?Nominal wages will decrease and short-run aggregate supply will increase until full employment is restored in the long run.Suppose that the economy is in a recession. In the absence of government policy action to restore the economy to full employment, how will the economy adjust in the long run?The SRAS2 curve shifts to the right as nominal wages decrease and full employment is restored.If the natural rate of unemployment exceeds the actual rate of unemployment, which of the following will occur in the long run in the absence of government intervention?Nominal wages will increase.Suppose an economy is operating above full employment. Which of the following fiscal policy actions and resulting changes in aggregate demand will move the economy back towards full employment?Increasing taxes, which will shift the AD curve leftward.Which of the following represents an appropriate fiscal policy for the given economic conditions?A contractionary fiscal policy is appropriate to reduce inflation when there is an inflationary gap.The government of Olympia is considering a fiscal policy action to slow the economy and curb inflation. If the marginal propensity to consume is 0.8, which of the following responses correctly identifies a policy action that would help the government achieve its goals and the impact of that action on Olympia's real gross domestic product (GDP)?Decreasing government spending by $10 billion decreases real GDP by a maximum of $50 billion.What is an automatic stabilizer?It is a program or policy that counteracts the business cycle without any new government action required.Which of the following best explains how income taxes can moderate a business cycle during an expansion?Tax payments increase automatically as gross domestic product (GDP) rises, which dampens consumption spending.How will automatic stabilizers affect the economy during a recession?They will shift the aggregate demand curve to the right, increasing real output.