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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. 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.

2. Nominal GDP corrected for inflation; real GDP is calculated using prices from a given base year - which may not be the same as the year being measured or the year in which the calculations are made. Real GDP allows economists to compare changes in pr

3. 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.

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

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

6. 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).

7. Changes - adjustments - and strategies that the governments implements in spending or taxation to achieve particular economic goals.

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

9. 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).

10. An increase in the price level

11. A Latin phrase meaning 'all things constant.'

12. A bad depressingly prolonged recession in economic activity.

13. Consumer income rise - demand will rise.

14. Decisions by individuals about what to do and what not to do.

15. 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.

16. 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.

17. 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

18. Rising prices - across the board.

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

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

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

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

23. 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

24. 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.

25. Movement up or down a single demand curve - contrasted with movement of the demand curve itself.

26. The effort of workers.

27. The long-run pattern of growth and recession.

28. Anything that shows the economy as a whole.

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

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

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

32. 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.

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

34. 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.

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

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

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

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

39. The transition point between economic recession and recovery.

40. Not significantly responsive to changes in price.

41. A special tax imposed on imported goods.

42. 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.

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

44. Period in which the economy moves from a trough to a peak and a real GDP is increasing; also called a boom.

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

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

47. States that as prices rise - people are willing and able to buy less of a good and - hence - the quantity demanded decreases; as prices fall - people are willing and able to buy more - so the quantity demanded increases and the demand curve slopes do

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

49. 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.

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