Name: _______________________
AP Macroeconomics Problem Set #3
Aggregate Demand, Aggregate Supply and Fiscal Policy
Aggregate Demand and Aggregate Supply
1. Define and give examples of the determinants of aggregate demand.
3. Define and give examples of the determinants of aggregate supply.
5. Define sticky vs. flexible wages and prices.
Graph the following curves (on the same graph): Make sure to correctly label the axes.
7. AD
8. SRAS
9. LRAS.
Key Concepts
Define and explain each concept and give specific examples:
10. The Multiplier Effect and Spending Multiplier
14. Crowding Out
16. A Built-in Stabilizer
Macroeconomic Equilibrium
What causes each of the following?
18. An increase in AD?
19. A decrease in AD?
20. An increase in AS?
21. A decrease in AS?
Fiscal Policy
22.Explain the difference between expansionary and contractionary fiscal policies. Explain their
goals and give specific examples. (4 points)
28.To support your answer in #22, draw a recessionary gap and an inflationary gap. Draw and
explain how fiscal policy is used to close the gaps using accurate numbers. (4 points)
Practice Free Response Questions
Complete the attached FRQs. Make sure to fully explain when asked
FRQ #1: ( ____/10)
FRQ #2: ( ____/5)
FRQ #3: ( ____/7)