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AP® Macroeconomics · Unit 5 · Topic 5.7

Public Policy and Economic Growth: Topic Checklist (Macroeconomics 5.7)

Specific “I can…” statements for public policy and economic growth, each linked to the guide section and practice question that shows whether you can really do it.

Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.

Understanding

  • I can explain the two routes by which policy raises real GDP per capita: productivity and labour force participation. (Guide: “Why policy can change long-run growth”)
  • I can give examples of policies that raise physical capital, human capital, technology or participation, and name the channel for each. (Guide: “Policies that raise productivity or participation”)
  • I can define supply-side fiscal policy and explain that it works through incentives to work, save, invest and innovate. (Guide: “Supply-side fiscal policy”; Practice Q1)
  • I can explain why public investment in infrastructure shifts AD first and LRAS later. (Guide: “Government investment in infrastructure and technology”; Practice Q2)

Calculation

  • I can calculate real GDP per capita from output per worker and the employed share of the population. (Guide: Worked example 1; Practice Q3)
  • I can calculate the growth in real GDP per capita after a change in productivity, participation or population, and check it with the shortcut. (Guide: Worked example 1; Practice Q5)

Graphs and reasoning

  • I can draw an AD–AS graph showing a supply-side tax cut, with the short-run AD shift and the long-run SRAS and LRAS shifts. (Guide: Figure 1; Practice Q6(a)–(c))
  • I can explain why the price-level effect of a supply-side policy is ambiguous while real output rises. (Guide: “Supply-side fiscal policy”; Practice Q6(d))
  • I can tell a growth policy from a demand-only policy and explain why a demand boost at full employment mainly raises the price level in the long run. (Guide: Worked example 2; Practice Q7(b), Q7(d))
  • I can use a PPC with capital and consumer goods to explain the opportunity cost of faster growth. (Guide: Figure 2; Practice Q4, Q7(c))
  • I can explain how borrowing to fund a growth policy can crowd out private investment. (Guide: “Trade-offs and limits”; Practice Q6(e))

All ticked? You have finished Unit 5. Move on to Topic 6.1, Balance of Payments Accounts, or return to the course roadmap.

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