AP Macroeconomics Flashcards: Changes In The Ad As Model

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This deck focuses on Changes In The Ad As Model, giving you a quick way to review the definitions, rules, and examples that matter most for AP Macroeconomics.

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Flashcard 1: What is the short-run effect on real GDP if both AD and AS decrease?

Answer: Real GDP decreases. Both curves shifting left reduces equilibrium output.

Flashcard 2: What happens to AD when consumer confidence increases?

Answer: AD shifts right. Higher confidence increases consumption, boosting aggregate demand.

Flashcard 3: What is the short-run effect on price level if AS shifts left?

Answer: Price level rises. Leftward AS shift reduces supply, raising price level.

Flashcard 4: What is the effect on AS if there is a reduction in regulation?

Answer: AS shifts right. Reduced regulation lowers costs, increasing supply.

Flashcard 5: What is the effect on AS of a decrease in labor costs?

Answer: AS shifts right. Lower labor costs reduce production costs, increasing supply.

Flashcard 6: What does AS stand for in the AD-AS model?

Answer: Aggregate Supply. Represents total supply of goods and services in an economy.

Flashcard 7: What happens to equilibrium real GDP if AS shifts right?

Answer: Real GDP increases. Rightward AS shift increases output at every price level.

Flashcard 8: What is the impact on price level if both AD and AS increase?

Answer: Indeterminate. Opposite effects on price make the net result uncertain.

Flashcard 9: What is the short-run effect on the price level with a rightward AD shift?

Answer: Price level rises. Rightward AD shift increases demand, raising price level.

Flashcard 10: What is the impact on price level if both AD and AS increase?

Answer: Indeterminate. Opposite effects on price make the net result uncertain.

Flashcard 11: What is the short-run effect on real GDP if both AD and AS decrease?

Answer: Real GDP decreases. Both curves shifting left reduces equilibrium output.

Flashcard 12: What component of AD is directly affected by consumer spending?

Answer: Consumption. Consumer spending represents the largest AD component.

Flashcard 13: What shift occurs in AD if household wealth increases?

Answer: AD shifts right. Increased wealth boosts consumption and aggregate demand.

Flashcard 14: What happens to AS in the short run when input prices rise?

Answer: AS shifts left. Higher input costs reduce profitability, decreasing supply.

Flashcard 15: What is the short-run impact on price level when AD shifts left?

Answer: Price level falls. Leftward AD shift reduces demand, lowering price level.

Flashcard 16: What effect on AS might result from an increase in energy prices?

Answer: AS shifts left. Higher energy costs increase production costs, reducing supply.

Flashcard 17: What is the short-run impact on AS due to a natural disaster?

Answer: AS shifts left. Disasters damage productive capacity, reducing supply.

Flashcard 18: What component of AD is influenced by investment spending?

Answer: Investment. Investment spending is a key component of aggregate demand.

Flashcard 19: Identify the effect on price level if AS decreases.

Answer: Price level rises. Reduced supply with fixed demand pushes prices higher.

Flashcard 20: What is the effect on real GDP when AS increases in the short run?

Answer: Real GDP increases. Greater supply increases output at every price level.

Flashcard 21: Identify the effect on real GDP if AS decreases.

Answer: Real GDP decreases. Lower supply at each price level reduces equilibrium output.

Flashcard 22: Identify the effect on real GDP if AD increases.

Answer: Real GDP increases. Higher demand leads to increased production and output.

Flashcard 23: What does AS stand for in the AD-AS model?

Answer: Aggregate Supply. Represents total supply of goods and services in an economy.

Flashcard 24: What effect on AS might result from an increase in energy prices?

Answer: AS shifts left. Higher energy costs increase production costs, reducing supply.

Flashcard 25: What curve shifts in response to a change in monetary policy?

Answer: AD curve. Monetary policy affects spending through interest rates.

Flashcard 26: What is the effect on real GDP when AS increases in the short run?

Answer: Real GDP increases. Greater supply increases output at every price level.

Flashcard 27: What is the effect on AD if consumer expectations become more optimistic?

Answer: AD shifts right. Optimism increases spending expectations and current demand.

Flashcard 28: What happens to the AD curve during a financial crisis?

Answer: AD shifts left. Financial crises reduce spending and investment confidence.

Flashcard 29: What happens to the AD curve during a financial crisis?

Answer: AD shifts left. Financial crises reduce spending and investment confidence.

Flashcard 30: What is the effect on AS if there is a reduction in regulation?

Answer: AS shifts right. Reduced regulation lowers costs, increasing supply.

Flashcard 31: What is the short-run effect on price level of a fall in oil prices?

Answer: Price level falls. Lower oil prices shift AS right, reducing price level.

Flashcard 32: What happens to AS in the short run when input prices rise?

Answer: AS shifts left. Higher input costs reduce profitability, decreasing supply.

Flashcard 33: What is the effect on AD if there is an increase in net exports?

Answer: AD shifts right. Higher net exports directly increase aggregate demand.

Flashcard 34: In the short run, how does a decrease in interest rates affect AD?

Answer: AD shifts right. Lower rates stimulate investment and consumption spending.

Flashcard 35: What happens to AD when taxes increase?

Answer: AD shifts left. Higher taxes reduce disposable income, decreasing consumption.

Flashcard 36: What is the short-run effect on AS if there is an increase in business taxes?

Answer: AS shifts left. Higher business taxes increase costs, reducing supply.

Flashcard 37: What is the short-run impact on the price level when AD decreases?

Answer: Price level falls. Lower demand with fixed supply reduces equilibrium price.

Flashcard 38: What happens to AS in the short run if there is a technological setback?

Answer: AS shifts left. Technological setbacks reduce productivity, decreasing supply.

Flashcard 39: What is the effect on AD if consumer expectations become more optimistic?

Answer: AD shifts right. Optimism increases spending expectations and current demand.

Flashcard 40: Identify the effect on the equilibrium price level if AD increases.

Answer: Price level rises. Increased demand with fixed supply pushes prices higher.

Flashcard 41: What happens to AS in the short run if there is a technological setback?

Answer: AS shifts left. Technological setbacks reduce productivity, decreasing supply.

Flashcard 42: What component of AD is influenced by investment spending?

Answer: Investment. Investment spending is a key component of aggregate demand.

Flashcard 43: What effect does an increase in government spending have on AD?

Answer: AD shifts right. Government spending is a direct component of aggregate demand.

Flashcard 44: What axis represents the price level in the AD-AS model?

Answer: Vertical axis. Standard convention for plotting price level in macroeconomic models.

Flashcard 45: What does AD stand for in the AD-AS model?

Answer: Aggregate Demand. Represents total demand for goods and services in an economy.

Flashcard 46: What is the short-run effect on price level if AS shifts left?

Answer: Price level rises. Leftward AS shift reduces supply, raising price level.

Flashcard 47: What curve shifts in response to a change in monetary policy?

Answer: AD curve. Monetary policy affects spending through interest rates.

Flashcard 48: What is the short-run impact on the price level when AD decreases?

Answer: Price level falls. Lower demand with fixed supply reduces equilibrium price.

Flashcard 49: What is the effect on AS of a decrease in labor costs?

Answer: AS shifts right. Lower labor costs reduce production costs, increasing supply.

Flashcard 50: What is the short-run effect on price level of a fall in oil prices?

Answer: Price level falls. Lower oil prices shift AS right, reducing price level.

Flashcard 51: What is the effect on AD if there is an increase in net exports?

Answer: AD shifts right. Higher net exports directly increase aggregate demand.

Flashcard 52: What is the short-run effect on real GDP of a technological advancement?

Answer: Real GDP increases. Technology shifts AS right, increasing output at every price.

Flashcard 53: What happens to AD when consumer confidence increases?

Answer: AD shifts right. Higher confidence increases consumption, boosting aggregate demand.

Flashcard 54: Identify the effect on the equilibrium price level if AD increases.

Answer: Price level rises. Increased demand with fixed supply pushes prices higher.

Flashcard 55: What is the short-run impact on price level when AD shifts left?

Answer: Price level falls. Leftward AD shift reduces demand, lowering price level.

Flashcard 56: What axis represents real GDP in the AD-AS model?

Answer: Horizontal axis. Standard convention for plotting output in macroeconomic models.

Flashcard 57: Identify the effect on price level if AS decreases.

Answer: Price level rises. Reduced supply with fixed demand pushes prices higher.

Flashcard 58: What happens to AS when productivity improves?

Answer: AS shifts right. Higher productivity reduces per-unit costs, increasing supply.

Flashcard 59: What is the short-run effect on AS if there is an increase in business taxes?

Answer: AS shifts left. Higher business taxes increase costs, reducing supply.

Flashcard 60: What is the short-run effect on real GDP of a technological advancement?

Answer: Real GDP increases. Technology shifts AS right, increasing output at every price.

Flashcard 61: What axis represents the price level in the AD-AS model?

Answer: Vertical axis. Standard convention for plotting price level in macroeconomic models.

Flashcard 62: What axis represents real GDP in the AD-AS model?

Answer: Horizontal axis. Standard convention for plotting output in macroeconomic models.

Flashcard 63: Identify the effect on real GDP if AS decreases.

Answer: Real GDP decreases. Lower supply at each price level reduces equilibrium output.

Flashcard 64: What shift occurs in AD if household wealth increases?

Answer: AD shifts right. Increased wealth boosts consumption and aggregate demand.

Flashcard 65: Identify the effect on real GDP if AD increases.

Answer: Real GDP increases. Higher demand leads to increased production and output.

Flashcard 66: What happens to AS when productivity improves?

Answer: AS shifts right. Higher productivity reduces per-unit costs, increasing supply.

Flashcard 67: What is the short-run effect on unemployment if AD increases?

Answer: Unemployment decreases. Higher demand increases production, requiring more workers.

Flashcard 68: What does AD stand for in the AD-AS model?

Answer: Aggregate Demand. Represents total demand for goods and services in an economy.

Flashcard 69: What effect does an increase in government spending have on AD?

Answer: AD shifts right. Government spending is a direct component of aggregate demand.

Flashcard 70: What is the short-run impact on AS due to a natural disaster?

Answer: AS shifts left. Disasters damage productive capacity, reducing supply.

Flashcard 71: What happens to AD when taxes increase?

Answer: AD shifts left. Higher taxes reduce disposable income, decreasing consumption.

Flashcard 72: What component of AD is directly affected by consumer spending?

Answer: Consumption. Consumer spending represents the largest AD component.

Flashcard 73: What happens to AS if there is an improvement in technology?

Answer: AS shifts right. Technology improvements increase productivity and supply.

Flashcard 74: In the short run, how does a decrease in interest rates affect AD?

Answer: AD shifts right. Lower rates stimulate investment and consumption spending.

Flashcard 75: What happens to AS if there is an improvement in technology?

Answer: AS shifts right. Technology improvements increase productivity and supply.

Flashcard 76: What is the short-run effect on unemployment if AD increases?

Answer: Unemployment decreases. Higher demand increases production, requiring more workers.

Flashcard 77: What happens to equilibrium real GDP if AS shifts right?

Answer: Real GDP increases. Rightward AS shift increases output at every price level.