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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. Law stating that as a price of a good increases - the quantity demanded of the good decreases - and vice versa.

2. 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.

3. 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).

4. Graphic representation of an inverse relationship between wage growth (percentage change in price level - such as inflation) and unemployment.

5. 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).

6. The deliberate control of the money supply by the Federal government.

7. 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.

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

9. A good for which there is less demand as income rises; a good the demand for which falls as income rises and rises as income falls; consumer income rises while demand decreases.

10. The sum of all the quantities of a good supplies by all producers at each price.

11. Goods that compete with one another. If the price for one goes up the demand for the other will go up.

12. The lowest point of a business cycle

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

14. Restrictions on the quantity of a good that can be imported

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

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

17. The income earned by households and profits earned by firms after subtracting.

18. 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

19. A bad depressingly prolonged recession in economic activity.

20. Period in which a recession becomes prolonged and deep - involving high unemployment.

21. A measure of the price level - or the average level of prices.

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

23. A good the demand for which rises as income rises and falls as income falls; consumer income rises and demand rises.

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

25. The addition to total revenue created by selling one additional unit of ouput.

26. Short-run aggregate supply curve

27. A country has a trade deficit if the value of its commodity imports exceeds the value of its commodity exports.

28. A way of measuring the GDP by adding up all spending on final goods and services during a given year.

29. When the percent of change in the quantity demanded equals the percent of change in price.

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

31. Resource is unavailable in sufficient amounts to satisfy various ways society wants to use it.

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. Can be measured by using TR as a gauge; a decrease in TR following an increase in Price = Elastic Demand - When Price and TR move in opposite directions..... P?/TR? or P?/TR?

34. Enacted when the government deliberately increases its deficit to stimulate the economy; the government increases its spending (increases G) - cuts taxes (decreases T) - or both - and stimulates the economy by expanding aggregate demand (AD).

35. Price control set when the market price is believed to be too high.

36. Anything that can be used to produce something else

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

38. 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.

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

40. 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.

41. Mathematical approximation used to measure the effect of economic growth; this rule tells us the approximate number of years it will take for some measure (real GDP - price level - savings account - etc.) to double given a known annual percentage inc

42. Rising prices - across the board.

43. Decisions of individual producers and consumers determine what how and for whom to reduce. Minor Government interference. Economy is run by itself.

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

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

46. A movement along the demand curve in response to a change in price - ceteris paribus; change in price means move along the demand curve; movement = money.

47. When the price of one currency falls relative to another currency - the first currency has depreciated relative to the other one.

48. A person who has been unemployed and searching for a job for so long - that they have given up on finding a job and therefore forfeit unemployment.

49. States that as the price of a good increases - the quantity supplied of a good increases - and as the price of a good decreases - the quantity supplied of the good decreases.

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