Unit One ReviewBasic Economic Concepts

Unit One ReviewBasic Economic Concepts

AP MacroeconomicsAP MacroeconomicsMR. GRAHAMMR. GRAHAM

Which of the following is an example of a resource?I. PetroleumII. A factoryIII. A cheeseburger dinner

1. I only2. II only3. III only4. I and II only5. I, II and III

Which of the following situations represent(s) resource scarcity?I. Rapidly growing economies experience increasing levels of water pollution.II. There is a finite amount of petroleum in the physical environment.III. Cassette tapes are no longer being produced.

1. I only2. II only3. III only4. I and II only5. I, II and III

Suppose that you prefer reading a book you already own to watching TV and that you prefer watching TV to listening to music. If these are your only three choices, what is the opportunity cost of reading?

1. watching TV and listening to music2. watching TV3. listening to music4. sleeping5. the price of the book

Which of the following statements is/are normative?I. The price of gasoline is rising.II. The price of gasoline is too high.III. Gas prices are expected to fall in the near future.

1. I only2. II only3. III only4. I and II only5. I, II and III

Which of the following questions is studied in microeconomics?1. Should I go to college or get a job after I graduate?2. What government policies should be adopted to

promote employment in the economy?3. How many people are employed in the economy

this year?4. Has the overall level of prices in the economy

increased or decreased this year?5. What determines the overall salary levels paid to

workers in a given year?

During the recession phase of a business cycle, which of the following is likely to increase?1. The unemployment rate2. The price level3. Economic growth rates4. The labor force5. Wages

The labor force is made up of everyone who is

1. employed.2. old enough to work.3. actively seeking work.4. employed or unemployed.5. employed or capable of working.

A sustained increase in aggregate output over several decades represents

1. an expansion.2. a recovery.3. a recession.4. a depression.5. economic growth.

Which of the following is the most likely result of inflation?

1. falling employment2. a dollar will buy more than it did before3. people are discouraged from holding

cash4. price stability5. low aggregate output per capita

The other things equal assumption allows economists to

1. avoid making assumptions about reality.2. focus on the effects of only one change at a

time.3. oversimplify.4. allow nothing to change in their model.5. reflect all aspects of the real world in their

model.

Which point(s) on the graph represent efficiency in production?

A. A and GB. B, C, D, E, FC. A, B, C. D, E, F, GD. A, B, C, D, E, F, G and SE. A, B, C, D, E, F, G, S and

R

For this economy, an increase in the quantity of digital cameras produced without a corresponding decrease in the quantity of pocket PCs produced

A. cannot happen because there is always an opportunity cost.

B. is represented by a movement from point S to point A.

C. is represented by a movement from point F to point E.

D. is represented by a movement from point S to point D.

E. is only possible with an increase in resources or technology.

An increase in unemployment could be represented by a movement from point

A. G to FB. B to AC. F to RD. D to SE. S to D

Which of the following might allow this economy to move from point D to point R?A. more workersB. discovery of new

resourcesC. building new factoriesD. technological advancesE. all of the above

Use the graph to determine which country has an absolute advantage in producing each good. Absolute advantage Absolute advantage in wheat production in textile production

A. Country A Country BB. Country A Country AC. Country B Country AD. Country B Country BE. Country A Neither

For country A, the opportunity cost of a bushel of wheat is

A. ½ units of textilesB. ⅔ units of textilesC. 1⅓ units of textilesD. 1½ units of textilesE. 2 units of textiles

Use the graph to determine which country has a comparative advantage in producing each good

Comparative advantage Comparative advantage in wheat production in textile production

A. Country A Country BB. Country A Country AC. Country B Country AD. Country B Country BE. Country A Neither

If the two countries specialize and trade, which of the choices below describes the countries’ imports?

Import Wheat Import Textiles

A. Country A Country AB. Country A Country BC. Country B Country BD. Country B Country AE. Neither Country B

What is the highest price Country B is willing to pay to buy wheat from Country A?

A. ½ units of textilesB. ⅔ units of textilesC. 1 unit of textilesD. 1½ units of textilesE. 2 units of textiles