AP Macroeconomics Exam UPDATED
ACTUAL Questions and CORRECT
Answers
definition of economics - CORRECT ANSWER - the science of scarcity
positive statements - CORRECT ANSWER - Based on facts. Avoids value judgements
(what is).
normative - CORRECT ANSWER - subjective and involves judgement
determinants of demand - CORRECT ANSWER - -tastes and preferences
-related goods (substitutes and complements)
-Income (inferior vs normal goods)
-Buyers (number of consumers)
-expectations ( future price expectations)
normal goods - CORRECT ANSWER - goods that consumers demand more of when their
incomes rise
inferior goods - CORRECT ANSWER - Goods for which demand tends to fall when
income rises.
utility - CORRECT ANSWER - satisfaction, usefulness, or value one obtains from
consuming goods and services
marginal cost - CORRECT ANSWER - the increase in total cost that arises from an extra
unit of production
, production possibilities curve - CORRECT ANSWER - a graph that shows alternative
ways to use an economy's productive resources
law of supply - CORRECT ANSWER - producers offer more of a good as its price
increases and less as its price falls
relationship between price and quantity demanded - CORRECT ANSWER - inverse (as
price increases, demand decreases
relationship between price and quantity supplied - CORRECT ANSWER - direct (as price
increases, quantity supplied increases)
GDP - CORRECT ANSWER - -the total market value of all final goods and services
produced annually in an economy
- C+I+G+Xn
unemployment - CORRECT ANSWER - the number of people who are actively looking
for work but aren't currently employed
who benefits from inflation? - CORRECT ANSWER - borrowers and people with a fixed-
rate debts
Steps of business cycle - CORRECT ANSWER - expansion, peak, contraction, trough
full employment - CORRECT ANSWER - when all resources are fully utilized, and the
employment rate is at its natural rate
recession - CORRECT ANSWER - period of reduced economic activity
ACTUAL Questions and CORRECT
Answers
definition of economics - CORRECT ANSWER - the science of scarcity
positive statements - CORRECT ANSWER - Based on facts. Avoids value judgements
(what is).
normative - CORRECT ANSWER - subjective and involves judgement
determinants of demand - CORRECT ANSWER - -tastes and preferences
-related goods (substitutes and complements)
-Income (inferior vs normal goods)
-Buyers (number of consumers)
-expectations ( future price expectations)
normal goods - CORRECT ANSWER - goods that consumers demand more of when their
incomes rise
inferior goods - CORRECT ANSWER - Goods for which demand tends to fall when
income rises.
utility - CORRECT ANSWER - satisfaction, usefulness, or value one obtains from
consuming goods and services
marginal cost - CORRECT ANSWER - the increase in total cost that arises from an extra
unit of production
, production possibilities curve - CORRECT ANSWER - a graph that shows alternative
ways to use an economy's productive resources
law of supply - CORRECT ANSWER - producers offer more of a good as its price
increases and less as its price falls
relationship between price and quantity demanded - CORRECT ANSWER - inverse (as
price increases, demand decreases
relationship between price and quantity supplied - CORRECT ANSWER - direct (as price
increases, quantity supplied increases)
GDP - CORRECT ANSWER - -the total market value of all final goods and services
produced annually in an economy
- C+I+G+Xn
unemployment - CORRECT ANSWER - the number of people who are actively looking
for work but aren't currently employed
who benefits from inflation? - CORRECT ANSWER - borrowers and people with a fixed-
rate debts
Steps of business cycle - CORRECT ANSWER - expansion, peak, contraction, trough
full employment - CORRECT ANSWER - when all resources are fully utilized, and the
employment rate is at its natural rate
recession - CORRECT ANSWER - period of reduced economic activity
