AP MACROECONOMICS TEST BANK
UPDATED QUESTIONS AND VERIFIED
ANSWERS EXAM SUCCESS GUIDE
●● Choice
Answer: Human behavior to choose how to spend/use the world's scarce
resources.
●● Trade Offs
Answer: 1st Principle of Economics-the fact that people's choice results
in losing one quality or aspect of something in exchange for a quality or
aspect of another
●● Private Property
Answer: Goods or Services owned by a person for exclusive use
●● Opportunity Cost
Answer: Whatever must be given up to obtain a good or service
●● There's no such thing as a free lunch!
Answer: Milton Friedman famous quote explaining that even in a free
lunch, you are still paying opportunity cost (gas to get somewhere, time
it takes, etc)
, ●● Efficiency
Answer: Society getting the most out of its scarce resources
●● Equality
Answer: The property of distributing economic prosperity uniformly
among the members of society
●● Incentive
Answer: 4th principle of economics. Something that induces a person to
act a certain way (cigarette tax increase in the hopes to stop smoking)
●● Marginal Change
Answer: Small incremental changes to a plan of action (why buying in
bulk is sometimes a better deal)
●● Circular Flow Model
Answer: The illustration representing the flow of goods and services
between firms and households
●● Production Possibilities Frontier/ Production Possibility Curve
Answer: a graph that shows the combinations of output that an economy
can possibly produce given the available factors of production and the
available production technology
UPDATED QUESTIONS AND VERIFIED
ANSWERS EXAM SUCCESS GUIDE
●● Choice
Answer: Human behavior to choose how to spend/use the world's scarce
resources.
●● Trade Offs
Answer: 1st Principle of Economics-the fact that people's choice results
in losing one quality or aspect of something in exchange for a quality or
aspect of another
●● Private Property
Answer: Goods or Services owned by a person for exclusive use
●● Opportunity Cost
Answer: Whatever must be given up to obtain a good or service
●● There's no such thing as a free lunch!
Answer: Milton Friedman famous quote explaining that even in a free
lunch, you are still paying opportunity cost (gas to get somewhere, time
it takes, etc)
, ●● Efficiency
Answer: Society getting the most out of its scarce resources
●● Equality
Answer: The property of distributing economic prosperity uniformly
among the members of society
●● Incentive
Answer: 4th principle of economics. Something that induces a person to
act a certain way (cigarette tax increase in the hopes to stop smoking)
●● Marginal Change
Answer: Small incremental changes to a plan of action (why buying in
bulk is sometimes a better deal)
●● Circular Flow Model
Answer: The illustration representing the flow of goods and services
between firms and households
●● Production Possibilities Frontier/ Production Possibility Curve
Answer: a graph that shows the combinations of output that an economy
can possibly produce given the available factors of production and the
available production technology
