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AP Macroeconomics

Subjects : economics, ap
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Changes - adjustments - and strategies that the governments implements in spending or taxation to achieve particular economic goals.

2. Inflation created when an increase in the costs of production (wages or raw materials) shifts the short-run aggregate supply (AS) curve to the left; tends to push prices up while reducing the level of real GDP at the same time (stagflation).

3. The branch of economics that deals with human behavior and choices as they relate to relatively small units--the individual - the business firm - a single market.

4. The dollar value of production by a country's citizens.

5. The group of individuals who are either working or actively looking for work; the labor force includes the unemployed: labor force = number of individuals in labor force/number of individuals in the adult population - expressed as a percentage.

6. The study of scarcity and choice.

7. Goods that go together - if price ? the demand for both that good and complimentary good ?.

8. An industry structure in which there is only one seller for a product.

9. The cost of something in terms of what one must give up to get it.

10. A market with only a few sellers - each offering a product that is largely the same as the others' products; in an oligopoly - there is always a tension between cooperation and competition.

11. Occurs when supply and demand are balanced such that the market price and the quantity exchanged are under no market pressure to change.

12. The gross domestic product calculated using current-year prices; for example - the nominal GDP for 2001 would calculate the value of production using2001 prices for goods and services. Nominal GDP can vary widely from year to year - due to forces suc

13. When consumers substitute a similar - lower priced product for a product which is relatively more expensive.

14. A relationship between two factors in which the factors move in opposite directions. ex: price increases - then quantity decreases.

15. The amount of money available to consumers to purchase goods and services.

16. A curve depicting the relationship between real GDP demanded (i.e. - expenditures) and the price level in the economy; the aggregate demand curve slopes downward from left to right.

17. The highest point of a business cycle.

18. A shift of the demand curve resulting from a change in consumer taste and preferences.

19. A law stating that as an additional unit of a particular food is consumed the utility (satisfaction) gained decreases.

20. Total revenue (TR) price of a good multiplied by the number of units sold; TR = P*Q.

21. The willingness and ability of buyers to purchase a good or service.

22. The conflict between limited resources and unlimited human wants; the basic economic problem facing all societies.

23. A very high rate of inflation - under which prices go up very rapidly - often more than 1 -000 percent in a year. This causes money to become a poor store of value.

24. A country has a trade surplus if the value of its commodity exports exceeds the value of its commodity imports.

25. Monetary policy methods by which the Fed aims to increase the money supply and lower interest rates - thereby creating an increase in output; in pursuit of expansionary policy goals - the Fed can lower the required reserve ratio - lower the discount

26. A type of inflation that occurs when an economy's output (real GDP decreases and its price level rises; production stagnates (as during a recession) while prices (and unemployment) go up.

27. The income of households after taxes have been paid

28. The payment that capital receives in the factor market.

29. Expenditure by businesses on plant and equipment and the change in business invention.

30. Unemployment that reflects changes in the business cycle; the difference between the official unemployment rate & the natural rate of unemployment.

31. The sum of each individual consumer's demand curves for a certain good in a market (e.g. - all the individual quantities of Good B demanded at each price).

32. When the percent of change in quantity demanded is greater than the percent of change in price; when there is a large change in the quantity of a good demanded - and a small change in price of the good.

33. A special tax imposed on imported goods.

34. The proportion of each additional dollar of income that is saved.

35. The branch of economics that deals with human behavior and choices as they relate to the entire economy.

36. Inflation that follows from an increase in aggregate demand - which will cause equilibrium real GDP (Y) to increase and the equilibrium price level (P) to increase.

37. The proportion of each additional dollar of income that will go toward consumption expenditures.

38. The price of a domestic currency in terms of a foreign currency.

39. Where the demand curve is horizontal - reflecting situation in which any change in price reduces quantity demanded to '0.' the result of a competitive market consumers will go elsewhere to purchase the product.

40. Fluctuations in real GDP around the trend value; also called economic fluctuations.

41. The efforts of entrepreneurs in organizing resources for production taking risk to create new enterprises and innovating to develop new product.

42. The transition point between economic recession and recovery.

43. The dollar value of production within a nation's border.

44. Anything that shows the economy as a whole.

45. A curve defining the relationship between real production and price level.

46. The effort of workers.

47. A specific percentage of checking account deposits that each bank must keep in liquid - zero-interest reserves; this amount is set by the Fed.

48. A period of slow economic growth - usually accompanied by rising unemployment; two consecutive quarters of declining output.

49. Significantly responsive to a change in price.

50. A civilian - non-institutionalized adult is considered to be unemployed when he or she does not have a job but is actively looking for one; unemployment figures reflect the number of individuals meeting this definition who are parts of the labor forc