National Income & Price Determination unit test

A test on this unit alone, marked as a percentage and a letter grade — for the test your class is actually sitting, rather than for May. Answer everything, then submit once: seeing the answer to question 3 before attempting question 4 makes the final percentage meaningless.

Paper 1 Paper 2 Paper 3

Each paper is built from this unit’s 30 terms and is the same for everyone, so a teacher can assign “Unit 3, Paper 2” and every student sits the identical test. Multiple choice is marked objectively; the written sections you mark yourself against the model answer and rubric.

Suggested time 33 min 30 points0/17 attempted

Budget deficit vs national debt

Long-run aggregate supply (LRAS)

Self-correction from an inflationary gap

Marginal propensity to consume (MPC)

Marginal propensity to save (MPS)

Short-run aggregate supply (SRAS)

Shifters of AD

Lags in fiscal policy

Short-run equilibrium

Expansionary fiscal policy

Fiscal policy

Interest-rate effect

Short answer 1. Define or explain: Long-run equilibrium

3 pts

Short answer 2. Define or explain: Wealth effect

3 pts

Short answer 3. Define or explain: What shifts LRAS

3 pts

Short answer 4. Define or explain: Aggregate demand (AD)

3 pts

Free response

6 pts

This course has no free-response prompt tagged to this unit, so one from elsewhere in the course is used. It is still worth writing — the skill transfers.

Loriland is producing below full employment (a recessionary gap).

Draw a correctly labeled AD-AS graph showing the current short-run equilibrium relative to full-employment output Yf.

Identify one fiscal policy to close the gap.

Using the money market, show and explain the effect of an expansionary open-market operation on the nominal interest rate.

Explain how that interest-rate change affects AD and real GDP.