Transcription of UNIT 4 Macroeconomics SAMPLE QUESTIONS Key
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UNIT 4 Macroeconomics SAMPLE QUESTIONS Key
advanced placement Economics Teacher Resource Manual National Council on economic Education,New York, to SAMPLE Long Free-Response the economy is experiencing rising unemployment,slowing increases in real GDP andmodest Federal Reserve decides to follow an expansionary policy.(A)Describe what this policy might Federal Reserve could be buying bonds on theopen market,reducing the discount rate or reducing the reserve oftheseactions is designed to stimulate an economy that is showing signs ofentering a recession.(B)Ifthe policy is effective,explain the short-run effect it would have on each ofthe following:(i)Interest rates(ii)Private investment(iii)GDP(iv)EmploymentThese actions would(i)reduce interest money is available for loans,and the price ofthis money wouldfall.(ii)With lower interest rates,investment and some consumption would increase.(iii)With an increase in investment and consumption,aggregate demand will increase andGDP will increase.
Advanced Placement Economics Teacher Resource Manual © National Council on Economic Education, New York, N.Y. 579 Answers to …
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