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AP Macroeconomics Practice Quiz: Changes in the AD-AS Model in the Short Run

Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026

Test your understanding with short quizzes. This quiz has 10 questions to check your progress.

Question 1 of 10

In the short run, a significant increase in government spending will most likely cause which of the following changes in the economy?

All Questions (10)

In the short run, a significant increase in government spending will most likely cause which of the following changes in the economy?

A) A decrease in the price level and an increase in output.

B) An increase in the price level and an increase in output.

C) An increase in the price level and a decrease in output.

D) A decrease in the price level and a decrease in output.

Correct Answer: B

An increase in government spending is a positive shock to aggregate demand (AD). According to the provided content, a positive shock in AD causes output, employment, and the price level to rise in the short run.

A sudden, sharp increase in the price of oil, a key input for many industries, would be considered what type of shock, and what would be its short-run effect on the price level and employment?

A) A positive AD shock; price level rises, employment rises.

B) A negative AD shock; price level falls, employment falls.

C) A positive SRAS shock; price level falls, employment rises.

D) A negative SRAS shock; price level rises, employment falls.

Correct Answer: D

An increase in the price of a key input like oil is a negative shock to short-run aggregate supply (SRAS). The content states that a negative shock in SRAS causes output and employment to fall and the price level to rise in the short run.

If an economy simultaneously experiences a decrease in its real output and a decrease in its overall price level, which of the following events most likely occurred in the short run?

A) A decrease in consumer confidence.

B) A major technological breakthrough.

C) An increase in the costs of production.

D) An increase in the money supply.

Correct Answer: A

A simultaneous decrease in output and the price level is the result of a negative aggregate demand (AD) shock. A decrease in consumer confidence would cause consumers to spend less, shifting the AD curve to the left. The content states that a negative shock in AD causes output, employment, and the price level to fall in the short run.

Which of the following scenarios would lead to cost-push inflation in the short run?

A) The central bank increases interest rates.

B) The government reduces income taxes for households.

C) Widespread labor strikes lead to a significant increase in nominal wages.

D) A boom in the stock market increases household wealth.

Correct Answer: C

Cost-push inflation is caused by a negative shock to aggregate supply. A significant increase in nominal wages increases the cost of production for firms, which shifts the short-run aggregate supply (SRAS) curve to the left, causing the price level to rise (inflation) and output to fall.

A positive shock to the short-run aggregate supply (SRAS) curve will cause which of the following changes in the short run?

A) Output rises, price level rises.

B) Output falls, price level falls.

C) Output rises, price level falls.

D) Output falls, price level rises.

Correct Answer: C

The provided content explicitly states that a positive shock in SRAS causes output and employment to rise and the price level to fall in the short run. This could be caused by factors like an increase in productivity or a decrease in input prices.

An economy is experiencing demand-pull inflation. Which of the following correctly describes the short-run changes in output, employment, and the price level?

A) Output falls, employment falls, and the price level rises.

B) Output rises, employment rises, and the price level rises.

C) Output rises, employment rises, and the price level falls.

D) Output falls, employment falls, and the price level falls.

Correct Answer: B

Demand-pull inflation is caused by a positive change (or shock) in aggregate demand. According to the content, a positive shock in AD causes output, employment, and the price level to rise in the short run.

Suppose a country's major trading partners experience a strong economic expansion, leading them to buy more of the country's exports. In the short run, this will lead to:

A) a lower price level and lower employment.

B) a higher price level and lower employment.

C) a lower price level and higher employment.

D) a higher price level and higher employment.

Correct Answer: D

Increased demand for exports represents a positive shock to aggregate demand (AD). The content states that a positive shock in AD causes output, employment, and the price level to rise in the short run.

Both a positive aggregate demand shock and a negative short-run aggregate supply shock cause inflation. How do their short-run effects on output and employment differ?

A) The AD shock increases output and employment, while the SRAS shock decreases them.

B) The AD shock decreases output and employment, while the SRAS shock increases them.

C) Both shocks cause output and employment to increase.

D) Both shocks cause output and employment to decrease.

Correct Answer: A

A positive AD shock causes the price level, output, and employment to rise (demand-pull inflation). A negative SRAS shock causes the price level to rise but output and employment to fall (cost-push inflation). Therefore, their effects on output and employment are opposite.

According to the aggregate demand-aggregate supply model, a negative shock in aggregate demand causes which of the following in the short run?

A) The price level to rise, output to rise, and employment to rise.

B) The price level to fall, output to fall, and employment to fall.

C) The price level to rise, output to fall, and employment to fall.

D) The price level to fall, output to rise, and employment to rise.

Correct Answer: B

This is a direct application of the rule provided in the content. A negative shock in AD causes output, employment, and the price level to fall in the short run.

An economy experiences a short-run increase in real output and employment, but a decrease in the price level. This outcome is consistent with which of the following events?

A) A decrease in net exports.

B) An increase in government spending.

C) A decrease in the price of important natural resources.

D) An increase in expected future inflation by households.

Correct Answer: C

The combination of rising output/employment and a falling price level is the signature result of a positive short-run aggregate supply (SRAS) shock. A decrease in the price of natural resources lowers production costs for firms, causing a positive SRAS shock.