AP Macroeconomics Flashcards: Public Policy and Economic Growth
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Review key ideas with interactive flashcards. This set includes 10 cards to help you master important concepts.
How do public policies impacting productivity and labor force participation affect economic growth?
Policies that increase productivity and labor force participation lead to a higher real GDP per capita, which is a key measure of long-run economic growth.
Card 1 of 10
All Flashcards (10)
How do public policies impacting productivity and labor force participation affect economic growth?
Policies that increase productivity and labor force participation lead to a higher real GDP per capita, which is a key measure of long-run economic growth.
What is the primary mechanism through which supply-side fiscal policies influence the economy?
These policies work by changing the incentives for households and businesses, which in turn affects their economic behavior and decisions regarding work, investment, and spending.
Identify two specific types of government investment mentioned as public policies that promote long-run economic growth.
Government policies that invest in infrastructure (like roads and bridges) and technology are aimed at influencing long-run economic growth.
Which three key macroeconomic components are affected by supply-side fiscal policies?
Supply-side fiscal policies affect aggregate demand, aggregate supply, and an economy's potential output.
A government builds a national high-speed internet network. How does this policy affect long-run economic growth?
This investment in technology and infrastructure affects growth by increasing the productivity and efficiency of businesses and workers across the economy.
If a government enacts a supply-side policy like a tax cut for businesses, what is the intended impact on aggregate supply and potential output?
The intended impact is to incentivize businesses to invest and produce more, leading to an increase (a rightward shift) in both aggregate supply and potential output.
In which time frames (short run, long run, or both) do supply-side fiscal policies have an effect?
Supply-side fiscal policies affect aggregate demand, aggregate supply, and potential output in both the short run and the long run.
Define supply-side fiscal policies.
Supply-side fiscal policies are government measures that affect aggregate demand, aggregate supply, and potential output by influencing incentives that affect household and business economic behavior.
What is the ultimate goal of public policies aimed at influencing long-run economic growth?
The goal is to increase the economy's potential output by affecting factors like productivity, the labor force, and technology.
What is the relationship between public policy, productivity, and real GDP per capita?
Public policies that successfully increase productivity and labor force participation will cause an increase in real GDP per capita and overall economic growth.