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






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






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






4. 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.






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






6. The percentage of the civilian labor force that is unemployed. The number of persons unemployed divided by the number of persons in the civilian labor force (expressed as a percentage).






7. Significantly responsive to a change in price.






8. 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.






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






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






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






12. The dollar value of goods and services sold to governments.






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






14. Long- run aggregate supply curve






15. The dollar value of all the goods and services sold to house holds.






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






17. The effort of workers.






18. 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






19. 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.






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






21. Results an increase in the demand for normal goods and a decrease in the demand for inferior goods.






22. 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.






23. Will shift either to the left(decrease) in demand - or to the right(increase) in demand; shift is caused by a change in one of the non-price determinates for the good.






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






25. Government officials make decisions about economy.






26. A bad depressingly prolonged recession in economic activity.






27. A special tax imposed on imported goods.






28. A relationship between two factors in which the factors move in the same direction.






29. 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.






30. 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.






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






32. 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






33. Consumer income rise - demand will rise.






34. Not significantly responsive to changes in price.






35. Economic tool used to determine exactly the amount of the new demand deposits that can be created from an initial deposit.






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






38. 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.






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






40. 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).






41. An increase in the price level






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






43. 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






44. Real cost of an item is its opportunity cost.






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






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






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






48. Anything that shows the economy as a whole.






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






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