SOPHIA (MACROECONOMICS) UNIT 1 CORE
CONCEPTS AND APPLICATION QUESTIONS
FINAL REVIEW 2026.
⫸ Business-Cycle Trough. Ans: The point in a business cycle at
which business activity has reached a temporary minimum; the point
at which a recession has ended and an expansion (recovery) begins.
⫸ Choice. Ans: The decision made by an individual as a result of the
scarcity of resources.
⫸ Comparative Advantage. Ans: Concept in economics that a country
should specialize in producing and exporting only those goods and
services which it can produce more efficiently (at lower opportunity
cost) than other goods and services (which it should import).
-An economy that has the lowest opportunity cost for producing a
particular good.
⫸ Deflation. Ans: A decline in the economy's price level.
-encourages people to hold cash rather than invest in new factories
and productive
-The annual percentage change in the aggregate price level is negative
⫸ Depression. Ans: A deep recession with high levels of
unemployment.
, ⫸ Economic Growth. Ans: Allows a sustained rise in aggregate
output. The sources of growth are increases in resources and progress
in technology. Results in the PPC shifting to the right.
⫸ Equilibrium. Ans: The critical intersection point at which
agreement between consumers and suppliers occurs on products or
services.
⫸ Equilibrium Price. Ans: The price at which consumers and willing
to pull out of the market the exact quantity of product that suppliers
are willing to push into the market.
⫸ Equilibrium Quantity. Ans: The quantity in which consumers are
willing to pull out of the market they same amount as the suppliers are
willing to push into the market.
⫸ Expansions. Ans: A phase of the business cycle when the economy
moves from a trough to a peak.
-An economy has rising total output accompanied by increasing
employment.
⫸ Inflation. Ans: An increase in the economy's price level.
-a rising aggregate price level.
⫸ Labor Force. Ans: People who are willing and able to do work.
CONCEPTS AND APPLICATION QUESTIONS
FINAL REVIEW 2026.
⫸ Business-Cycle Trough. Ans: The point in a business cycle at
which business activity has reached a temporary minimum; the point
at which a recession has ended and an expansion (recovery) begins.
⫸ Choice. Ans: The decision made by an individual as a result of the
scarcity of resources.
⫸ Comparative Advantage. Ans: Concept in economics that a country
should specialize in producing and exporting only those goods and
services which it can produce more efficiently (at lower opportunity
cost) than other goods and services (which it should import).
-An economy that has the lowest opportunity cost for producing a
particular good.
⫸ Deflation. Ans: A decline in the economy's price level.
-encourages people to hold cash rather than invest in new factories
and productive
-The annual percentage change in the aggregate price level is negative
⫸ Depression. Ans: A deep recession with high levels of
unemployment.
, ⫸ Economic Growth. Ans: Allows a sustained rise in aggregate
output. The sources of growth are increases in resources and progress
in technology. Results in the PPC shifting to the right.
⫸ Equilibrium. Ans: The critical intersection point at which
agreement between consumers and suppliers occurs on products or
services.
⫸ Equilibrium Price. Ans: The price at which consumers and willing
to pull out of the market the exact quantity of product that suppliers
are willing to push into the market.
⫸ Equilibrium Quantity. Ans: The quantity in which consumers are
willing to pull out of the market they same amount as the suppliers are
willing to push into the market.
⫸ Expansions. Ans: A phase of the business cycle when the economy
moves from a trough to a peak.
-An economy has rising total output accompanied by increasing
employment.
⫸ Inflation. Ans: An increase in the economy's price level.
-a rising aggregate price level.
⫸ Labor Force. Ans: People who are willing and able to do work.
