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AP Macroeconomics 3.1 Aggregate Demand Ad Questions

Explain the downward-sloping AD curve through wealth, interest-rate, and exchange-rate effects and identify shifts from changing AD components.

Syllabus
Effective Fall 2022
Course
AP Macroeconomics

Exam points

  • identify consumption, investment, government spending and net exports as aggregate-demand components
  • explain the downward AD slope with real-wealth, interest-rate and exchange-rate effects
  • distinguish a price-level movement along AD from a non-price determinant shifting the curve
  • predict AD shifts from consumer confidence, saving or income-tax changes that alter consumption
  • predict AD shifts from real interest rates, monetary conditions or business investment
  • predict how a government-spending change shifts aggregate demand
  • predict AD shifts from imports, exports, exchange rates or foreign-income changes affecting net exports

Covered syllabus points

MOD-2.A—a. Define (using graphs as appropriate) the aggregate demand (AD) curve. b. Explain (using graphs as appropriate) the slope of the…

Question 1

[Maximum number: 1]
Figure for Question 1 — AP Macroeconomics

Assume that the United States economy is operating below full employment.

Assume the government lowers income tax rates to eliminate the recessionary gap. Will each of the following increase, decrease, or stay the same?

Aggregate demand. Explain.

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