Test your basic knowledge |

AP Macroeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

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






2. Unemployment faced by workers who have lost their jobs because of changing market (demand) conditions & who have transferable skills; unemployment due to the natural frictions of the economy.






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






4. 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.






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






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






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






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






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






10. 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).






11. 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.






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






13. 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.






14. Anything that shows the economy as a whole.






15. 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






16. The difference between the maximum price a consume is (or would be) willing to pay and the price he or she actually pays.






17. 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






18. The amount of a good actually sold.






19. An increase or decrease in consumer income will cause a shift in the Demand Curve.






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






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






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






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






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






25. A comprehensive group of statistics that measures various aspects of the economy's performance - net exports exports minus imports.






26. Anything that can be used to produce something else






27. 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.






28. Significantly responsive to a change in price.






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






30. A shift in the demand curve resulting from consumer expectations regarding future income or future price of Goods and Services.






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






32. The income of households after taxes have been paid






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






34. 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.






35. Consumer income rise - demand will rise.






36. Anything from the land and/or nature. Ex: minerals - timber - petroleum - cotton.






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






38. The graphical representation of the law of demand. Shows the amount of a good buyers are willing and able to buy at various prices.






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






40. 1/RRR - where RRR is the required reserve ratio expressed as a decimal; if the required reserve ratio is 10% (0.1) - the money multiplier is 1/0.1 = 10.






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






42. An increase in the price level






43. 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.






44. 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






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






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






47. 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.






48. 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.






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






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