AP Macroeconomics Unit 1 test UPDATED
ACTUAL Questions and CORRECT
Answers
economics - CORRECT ANSWER - study of how society manages its scarce resources
macroeconomics vs microeconomics - CORRECT ANSWER - macro: study of nation
wide phenomena like inflation, growth and income etc.
micro: concerned with specific households and firms
Scarcity - CORRECT ANSWER - society has limited resources and cant produce all goods
and services that people want
GDP and its formula - CORRECT ANSWER - 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 - CORRECT ANSWER - when 2 things cant be happening at the same time so
you have to pick one or the other (efficiency vs equity)
opportunity cost - CORRECT ANSWER - what you give up to have a different item (spent
time studying instead of watching TV)
TINSTAAFL - CORRECT ANSWER - (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 - CORRECT ANSWER - the property of society getting the most it can out of
scarce resources
, Equity - CORRECT ANSWER - the property of distributing economic prosperity fairly
among the members of society
marginal analysis - CORRECT ANSWER - examining the marginal changes and used to
make good decisions
incentives - CORRECT ANSWER - something that motivates a person to work
3 basic economic questions - CORRECT ANSWER - 1. what goods are being produced
2. for whom are they being produced
3. how are the goods being produced
market economy - CORRECT ANSWER - the goods and services are determined by the
firms and the producers and the consumers in the market place, little government intervention
command economy - CORRECT ANSWER - all decisions are based on one central
government
capitalism - CORRECT ANSWER - 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 - CORRECT ANSWER - all public policy is controlled and each person
works and is paid according to their abilities and needs
socialism - CORRECT ANSWER - means of production, distribution, and exchange
should be owned or regulated by the community as a whole.
Adam Smith - CORRECT ANSWER - set up David Ricardo to come up with the theory of
comparative advantage and described economics with the invisible hand
ACTUAL Questions and CORRECT
Answers
economics - CORRECT ANSWER - study of how society manages its scarce resources
macroeconomics vs microeconomics - CORRECT ANSWER - macro: study of nation
wide phenomena like inflation, growth and income etc.
micro: concerned with specific households and firms
Scarcity - CORRECT ANSWER - society has limited resources and cant produce all goods
and services that people want
GDP and its formula - CORRECT ANSWER - 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 - CORRECT ANSWER - when 2 things cant be happening at the same time so
you have to pick one or the other (efficiency vs equity)
opportunity cost - CORRECT ANSWER - what you give up to have a different item (spent
time studying instead of watching TV)
TINSTAAFL - CORRECT ANSWER - (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 - CORRECT ANSWER - the property of society getting the most it can out of
scarce resources
, Equity - CORRECT ANSWER - the property of distributing economic prosperity fairly
among the members of society
marginal analysis - CORRECT ANSWER - examining the marginal changes and used to
make good decisions
incentives - CORRECT ANSWER - something that motivates a person to work
3 basic economic questions - CORRECT ANSWER - 1. what goods are being produced
2. for whom are they being produced
3. how are the goods being produced
market economy - CORRECT ANSWER - the goods and services are determined by the
firms and the producers and the consumers in the market place, little government intervention
command economy - CORRECT ANSWER - all decisions are based on one central
government
capitalism - CORRECT ANSWER - 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 - CORRECT ANSWER - all public policy is controlled and each person
works and is paid according to their abilities and needs
socialism - CORRECT ANSWER - means of production, distribution, and exchange
should be owned or regulated by the community as a whole.
Adam Smith - CORRECT ANSWER - set up David Ricardo to come up with the theory of
comparative advantage and described economics with the invisible hand
