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AP Macroeconomics Exam Questions
and Answers 100% Pass
definition of economics - ✔✔the science of scarcity
positive statements - ✔✔Based on facts. Avoids value judgements (what is).
normative - ✔✔subjective and involves judgement
determinants of demand - ✔✔-tastes and preferences
-related goods (substitutes and complements)
-Income (inferior vs normal goods)
-Buyers (number of consumers)
-expectations ( future price expectations)
normal goods - ✔✔goods that consumers demand more of when their incomes rise
inferior goods - ✔✔Goods for which demand tends to fall when income rises.
utility - ✔✔satisfaction, usefulness, or value one obtains from consuming goods and services
marginal cost - ✔✔the increase in total cost that arises from an extra unit of production
production possibilities curve - ✔✔a graph that shows alternative ways to use an economy's productive
resources
law of supply - ✔✔producers offer more of a good as its price increases and less as its price falls
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, 2|Page
relationship between price and quantity demanded - ✔✔inverse (as price increases, demand decreases
relationship between price and quantity supplied - ✔✔direct (as price increases, quantity supplied
increases)
GDP - ✔✔-the total market value of all final goods and services produced annually in an economy
- C+I+G+Xn
unemployment - ✔✔the number of people who are actively looking for work but aren't currently
employed
who benefits from inflation? - ✔✔borrowers and people with a fixed-rate debts
Steps of business cycle - ✔✔expansion, peak, contraction, trough
full employment - ✔✔when all resources are fully utilized, and the employment rate is at its natural rate
recession - ✔✔period of reduced economic activity
expansion - ✔✔A period of economic growth as measured by a rise in real GDP
frictional unemployment - ✔✔-A type of unemployment caused by workers voluntarily changing jobs
and by temporary layoffs; unemployed workers between jobs.
-also includes seasonal unemployment
structural unemployment - ✔✔-unemployment that occurs when workers' skills do not match the jobs
that are available
-also includes technological unemployment
cyclical unemployment - ✔✔-unemployment caused by a business cycle recession
-not included in natural rate of unemployment
Emily Charlene © 2025, All Rights Reserved.
AP Macroeconomics Exam Questions
and Answers 100% Pass
definition of economics - ✔✔the science of scarcity
positive statements - ✔✔Based on facts. Avoids value judgements (what is).
normative - ✔✔subjective and involves judgement
determinants of demand - ✔✔-tastes and preferences
-related goods (substitutes and complements)
-Income (inferior vs normal goods)
-Buyers (number of consumers)
-expectations ( future price expectations)
normal goods - ✔✔goods that consumers demand more of when their incomes rise
inferior goods - ✔✔Goods for which demand tends to fall when income rises.
utility - ✔✔satisfaction, usefulness, or value one obtains from consuming goods and services
marginal cost - ✔✔the increase in total cost that arises from an extra unit of production
production possibilities curve - ✔✔a graph that shows alternative ways to use an economy's productive
resources
law of supply - ✔✔producers offer more of a good as its price increases and less as its price falls
Emily Charlene © 2025, All Rights Reserved.
, 2|Page
relationship between price and quantity demanded - ✔✔inverse (as price increases, demand decreases
relationship between price and quantity supplied - ✔✔direct (as price increases, quantity supplied
increases)
GDP - ✔✔-the total market value of all final goods and services produced annually in an economy
- C+I+G+Xn
unemployment - ✔✔the number of people who are actively looking for work but aren't currently
employed
who benefits from inflation? - ✔✔borrowers and people with a fixed-rate debts
Steps of business cycle - ✔✔expansion, peak, contraction, trough
full employment - ✔✔when all resources are fully utilized, and the employment rate is at its natural rate
recession - ✔✔period of reduced economic activity
expansion - ✔✔A period of economic growth as measured by a rise in real GDP
frictional unemployment - ✔✔-A type of unemployment caused by workers voluntarily changing jobs
and by temporary layoffs; unemployed workers between jobs.
-also includes seasonal unemployment
structural unemployment - ✔✔-unemployment that occurs when workers' skills do not match the jobs
that are available
-also includes technological unemployment
cyclical unemployment - ✔✔-unemployment caused by a business cycle recession
-not included in natural rate of unemployment
Emily Charlene © 2025, All Rights Reserved.
