AP Macroeconomics ACTUAL EXAM WITH QUESTIONS AND CORRECT VERIFIED ANSWERS
GRADED A+ GUARANTEED PASS
aggregate demand curve - (answer)a curve depicting the relationship between real GDP demanded (i.e.,
expenditures) and the price level in the economy; the aggregate demand curve slopes downward from
left to right.
aggregate supply curve - (answer)a curve defining the relationship between real production and price
level.
business cycles - (answer)fluctuations in real GDP around the trend value; also called economic
fluctuations.
consumer surplus - (answer)the difference between the maximum price a consume is (or would be)
willing to pay and the price he or she actually pays.
cost-push inflation - (answer)inflation created when an increase in the costs of production (wages or raw
materials) shifts the short-run aggregate supply (AS) curve to the left; tends to push prices up while
reducing the level of real GDP at the same time (stagflation).
cyclical unemployment - (answer)unemployment that reflects changes in the business cycle; the
difference between the official unemployment rate & the natural rate of unemployment.
demand-pull inflation - (answer)inflation that follows from an increase in aggregate demand, which will
cause equilibrium real GDP (Y) to increase and the equilibrium price level (P) to increase.
depreciation - (answer)when the price of one currency falls relative to another currency, the first
currency has depreciated relative to the other one.
depression - (answer)period in which a recession becomes prolonged and deep, involving high
unemployment.
elastic - (answer)significantly responsive to a change in price.
, AP Macroeconomics ACTUAL EXAM WITH QUESTIONS AND CORRECT VERIFIED ANSWERS
GRADED A+ GUARANTEED PASS
exchange rate - (answer)the price of a domestic currency in terms of a foreign currency.
expansion - (answer)period in which the economy moves from a trough to a peak and a real GDP is
increasing; also called a boom.
expansionary fiscal policy - (answer)enacted when the government deliberately increases its deficit to
stimulate the economy; the government increases its spending (increases G), cuts taxes (decreases T), or
both, and stimulates the economy by expanding aggregate demand (AD).
expansionary monetary policy - (answer)monetary policy methods by which the Fed aims to increase the
money supply and lower interest rates, thereby creating an increase in output; in pursuit of
expansionary policy goals, the Fed can lower the required reserve ratio, lower the discount rate, or
purchase government securities on the open market.
expenditure approach - (answer)a way of measuring the GDP by adding up all spending on final goods
and services during a given year.
fiscal policy - (answer)changes, adjustments, and strategies that the governments implements in
spending or taxation to achieve particular economic goals.
frictional unemployment - (answer)unemployment faced by workers who have lost their jobs because of
changing market (demand) conditions & who have transferable skills; unemployment due to the natural
frictions of the economy.
Gross Domestic Product - (answer)the dollar value of production within a nation's border.
Gross National Product - (answer)the dollar value of production by a country's citizens.
GRADED A+ GUARANTEED PASS
aggregate demand curve - (answer)a curve depicting the relationship between real GDP demanded (i.e.,
expenditures) and the price level in the economy; the aggregate demand curve slopes downward from
left to right.
aggregate supply curve - (answer)a curve defining the relationship between real production and price
level.
business cycles - (answer)fluctuations in real GDP around the trend value; also called economic
fluctuations.
consumer surplus - (answer)the difference between the maximum price a consume is (or would be)
willing to pay and the price he or she actually pays.
cost-push inflation - (answer)inflation created when an increase in the costs of production (wages or raw
materials) shifts the short-run aggregate supply (AS) curve to the left; tends to push prices up while
reducing the level of real GDP at the same time (stagflation).
cyclical unemployment - (answer)unemployment that reflects changes in the business cycle; the
difference between the official unemployment rate & the natural rate of unemployment.
demand-pull inflation - (answer)inflation that follows from an increase in aggregate demand, which will
cause equilibrium real GDP (Y) to increase and the equilibrium price level (P) to increase.
depreciation - (answer)when the price of one currency falls relative to another currency, the first
currency has depreciated relative to the other one.
depression - (answer)period in which a recession becomes prolonged and deep, involving high
unemployment.
elastic - (answer)significantly responsive to a change in price.
, AP Macroeconomics ACTUAL EXAM WITH QUESTIONS AND CORRECT VERIFIED ANSWERS
GRADED A+ GUARANTEED PASS
exchange rate - (answer)the price of a domestic currency in terms of a foreign currency.
expansion - (answer)period in which the economy moves from a trough to a peak and a real GDP is
increasing; also called a boom.
expansionary fiscal policy - (answer)enacted when the government deliberately increases its deficit to
stimulate the economy; the government increases its spending (increases G), cuts taxes (decreases T), or
both, and stimulates the economy by expanding aggregate demand (AD).
expansionary monetary policy - (answer)monetary policy methods by which the Fed aims to increase the
money supply and lower interest rates, thereby creating an increase in output; in pursuit of
expansionary policy goals, the Fed can lower the required reserve ratio, lower the discount rate, or
purchase government securities on the open market.
expenditure approach - (answer)a way of measuring the GDP by adding up all spending on final goods
and services during a given year.
fiscal policy - (answer)changes, adjustments, and strategies that the governments implements in
spending or taxation to achieve particular economic goals.
frictional unemployment - (answer)unemployment faced by workers who have lost their jobs because of
changing market (demand) conditions & who have transferable skills; unemployment due to the natural
frictions of the economy.
Gross Domestic Product - (answer)the dollar value of production within a nation's border.
Gross National Product - (answer)the dollar value of production by a country's citizens.
