AP®︎ Macroeconomics: Topic 3.8 Practice Test
Prepare for your quiz, test, or the AP exam with focused practice questions on Topic 3.8 of AP Macroeconomics – Fiscal Policy.
Questions List
Topic 3.8
Question 1 Easy
This question tests the following: POL-1.A.1
What is fiscal policy primarily used to influence?
What You’re Being Tested On:
Explore the learning objectives taken directly from the College Board’s AP® Macroeconomics Curriculum. Ensure you’re prepared for the exact topics covered on the AP® exam, in-class tests, and quizzes, and gain confidence in your mastery of the material.
Topic 3.8: Fiscal Policy
Learning Objective: POL-1.A
a. Define fiscal policy and related terms. b. Explain (using graphs as appropriate) the short-run effects of a fiscal policy action. c. Calculate the short-run effects of a fiscal policy action.
Essential Knowledge: POL-1.A.1
Governments implement fiscal policies to achieve macroeconomic goals, such as full employment.
Essential Knowledge: POL-1.A.2
The tools of fiscal policy are government spending and taxes/transfers.
Essential Knowledge: POL-1.A.3
Changes in government spending affect aggregate demand directly, and changes in taxes/transfers affect aggregate demand indirectly.
Essential Knowledge: POL-1.A.4
The government spending multiplier is greater than the tax multiplier.
Essential Knowledge: POL-1.A.5
Expansionary or contractionary fiscal policies are used to restore full employment when the economy is in a negative (i.e., recessionary) or positive (i.e., inflationary) output gap.
Essential Knowledge: POL-1.A.6
Fiscal policy can influence aggregate demand, real output, and the price level. [See also EK MKT-5.E.2 for the effect on exchange rates.]
Essential Knowledge: POL-1.A.7
The AD–AS model is used to demonstrate the short-run effects of fiscal policy.
Learning Objective: POL-1.B
Define why there are lags to discretionary fiscal policy.
Essential Knowledge: POL-1.B.1
In reality, there are lags to discretionary fiscal policy because of factors such as the time it takes to decide on and implement a policy action.
