Economics Micro & Macro (CliffsAP)

Determinants of Aggregate Supply:

■ Resource prices

■ Technology

■ Government (subsidies and taxes)

■ Number of suppliers

3. A.If the economy were experiencing a recession, the Federal Reserve would increase the money supply, which
   would make more money available at a lower cost for consumption.

B.Congress would vote on decreasing taxes and/or increasing spending. This would increase disposable income,

which would increase aggregate demand to stimulate a sleeping economy.

Production Possibilities Curve

X

0Y

Price level rises due to an increase

in aggregate demand

Price

Level

AD^1

AD^2

Part IV: AP Macroeconomics & Microeconomics Tests