AP Macroeconomics Unit 1 test Questions and Answers 100% Pass

AP Macroeconomics Unit 1 test Questions and Answers 100% Pass economics - study of how society manages its scarce resources macroeconomics vs microeconomics - macro: study of nation wide phenomena like inflation, growth and income etc. micro: concerned with specific households and firms Scarcity - society has limited resources and cant produce all goods and services that people want GDP and its formula - monetary value of all finished goods made by each worker in a specific time formula: GDP= C+I+G+(Ex-Im) c=spending by consumers I=investment by businesses G=government spending (EX-IM)=exports minus imports trade-off - when 2 things cant be happening at the same time so you have to pick one or the other (efficiency vs equity) opportunity cost - what you give up to have a different item (spent time studying instead of watching TV) TINSTAAFL - (There's no such thing as free lunch) we have to give up one thing that we like to get another thing we like Efficiency - the property of society getting the most it can out of scarce resources Equity - the property of distributing economic prosperity fairly among the members of society 2 | P a g e Emily Charlene © 2025, All Rights Reserved. marginal analysis - examining the marginal changes and used to make good decisions incentives - something that motivates a person to work 3 basic economic questions - 1. what goods are being produced 2. for whom are they being produced 3. how are the goods being produced market economy - the goods and services are determined by the firms and the producers and the consumers in the market place, little government intervention command economy - all decisions are based on one central government capitalism - an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state. communism - all public policy is controlled and each person