AP Macroeconomics Exam Test Questions Verified
Marking Scheme Current Update (Verified Pass)
.a decrease in TR following an increase in price = elastic demand - ANSWER-When Price and TR move in
opposite directions..... P↑/TR↓ or P↓/TR↑
.aggregate demand curve - ANSWER-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.
.aggregate supply curve - ANSWER-a curve defining the relationship between real production and price
level.
.business cycle - ANSWER-the long-run pattern of growth and recession.
.business cycles - ANSWER-fluctuations in real GDP around the trend value; also called economic
fluctuations.
.Ceteris Paribus - ANSWER-(sayr-iht-us pahr-ih-bos) a Latin phrase meaning "all things constant."
.change in quantity demanded - ANSWER-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.
.changes in consumer expectations - ANSWER-a shift in the demand curve resulting from consumer
expectations regarding future income or future price of Goods and Services.
.command economy - ANSWER-government officials make decisions about economy.
.complimentary goods - ANSWER-goods that go together, if price ↑ the demand for both that good and
complimentary good ↓.
, .consumer good - ANSWER-an increase or decrease in consumer income will cause a shift in the Demand
Curve.
.consumer income rise - ANSWER-results an increase in the demand for normal goods and a decrease in
the demand for inferior goods.
.consumer surplus - ANSWER-the difference between the maximum price a consume is (or would be)
willing to pay and the price he or she actually pays.
.consumer taste and preferences - ANSWER-a shift of the demand curve resulting from a change in
consumer taste and preferences.
.consumption expenditures - ANSWER-the dollar value of all the goods and services sold to house holds.
.cost-push inflation - ANSWER-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).
.cyclical unemployment - ANSWER-unemployment that reflects changes in the business cycle; the
difference between the official unemployment rate & the natural rate of unemployment.
.demand - ANSWER-the willingness and ability of buyers to purchase a good or service.
.demand curve - ANSWER-the graphical representation of the law of demand. Shows the amount of a
good buyers are willing and able to buy at various prices.
.demand curve shifts - ANSWER-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.
.demand elasticity - ANSWER-can be measured by using TR as a gauge; a decrease in TR following an
increase in Price = Elastic Demand.
Marking Scheme Current Update (Verified Pass)
.a decrease in TR following an increase in price = elastic demand - ANSWER-When Price and TR move in
opposite directions..... P↑/TR↓ or P↓/TR↑
.aggregate demand curve - ANSWER-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.
.aggregate supply curve - ANSWER-a curve defining the relationship between real production and price
level.
.business cycle - ANSWER-the long-run pattern of growth and recession.
.business cycles - ANSWER-fluctuations in real GDP around the trend value; also called economic
fluctuations.
.Ceteris Paribus - ANSWER-(sayr-iht-us pahr-ih-bos) a Latin phrase meaning "all things constant."
.change in quantity demanded - ANSWER-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.
.changes in consumer expectations - ANSWER-a shift in the demand curve resulting from consumer
expectations regarding future income or future price of Goods and Services.
.command economy - ANSWER-government officials make decisions about economy.
.complimentary goods - ANSWER-goods that go together, if price ↑ the demand for both that good and
complimentary good ↓.
, .consumer good - ANSWER-an increase or decrease in consumer income will cause a shift in the Demand
Curve.
.consumer income rise - ANSWER-results an increase in the demand for normal goods and a decrease in
the demand for inferior goods.
.consumer surplus - ANSWER-the difference between the maximum price a consume is (or would be)
willing to pay and the price he or she actually pays.
.consumer taste and preferences - ANSWER-a shift of the demand curve resulting from a change in
consumer taste and preferences.
.consumption expenditures - ANSWER-the dollar value of all the goods and services sold to house holds.
.cost-push inflation - ANSWER-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).
.cyclical unemployment - ANSWER-unemployment that reflects changes in the business cycle; the
difference between the official unemployment rate & the natural rate of unemployment.
.demand - ANSWER-the willingness and ability of buyers to purchase a good or service.
.demand curve - ANSWER-the graphical representation of the law of demand. Shows the amount of a
good buyers are willing and able to buy at various prices.
.demand curve shifts - ANSWER-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.
.demand elasticity - ANSWER-can be measured by using TR as a gauge; a decrease in TR following an
increase in Price = Elastic Demand.
