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Summary AP Macro questions and answers 2024
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AP Macro questions and answers 2024
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AP Macro questions and answers 2024Economics - The social science that studies how individuals, institutions, and
society make the optimal best choices under conditions of scarcity
The Economic Perspective entails (3): - 1. All choices involve costs and these costs
must be involved in an economic decision
2. To achieve a goal, people must make decisions that reflect their purposeful self-
interest
3. People compare marginal benefits and marginal costs when making a decision,
and will choose the situation where the marginal beneift>marginal cost
Scientific Method - Gathering data, testing hypotheses, and developing theories
and principles.
Microeconomics - Specific units in the economy (ex: how prices and output are
determined for products and how customers react to price changes)d
Macroeconomics - the study of economy-wide phenomena, including inflation,
unemployment, and economic growth
Positive Economics - Investigates facts or cause-and-effect relationships; the right
answer
,AP Macro questions and answers 2024
Normative Economics - Objective views of what ought to be or what policies
should be used to address an economic issue
Causes of Economizing Problem (2): - 1. Individuals and society have unlimited
economic wants
2. The economic means or resources to satisfy those wants are limited
Production Possibilities Curve (PPC) - A graph that shows the various combinations
of output that the economy can produce of two products, given the available
factors of production and the available production technology.
Budget Line - A line that shows the different combinations of two products a
consumer can purchase with a specific money income, given the products' prices.
Land - Natural resources
Labor - The contributed time and abilities of people who are producing goods and
services
,AP Macro questions and answers 2024
Capital - The machines, tools, and equipment used to make other goods and
services
Investment - The purchase of capital goods
Entrepreneurial Ability - The special human talents of individuals who combine
the other factors of production
Law of Increasing Opportunity Cost - To produce more of one good, a successively
larger amount of the other good must be sacrificed
Laizzez-Faire Economics - An economic system where government should not
interfere in the marketplace
Command System - A method of organizing an economy in which property
resources are publicly owned and government uses central economic planning to
direct and coordinate economic activities; command economy; communism
Market System - All the product and resource markets of a market economy and
the relationships among them; a method that allows the prices determined in
, AP Macro questions and answers 2024
those markets to allocate the economy's scarce resources and to communicate
and coordinate the decisions made by consumers, firms, and resource suppliers
Five Fundamental Questions - 1. What goods and services will be produced?
2. How will the goods and services be produced?
3. Who will get the goods and services?
4. How will the system accommodate change?
5. How will the system promote progress?
Circular Flow Diagram -
Economic System - A set of institutions and a coordinating mechanism to respond
to the economizing problem for an economy
Freedom of Enterprise - The freedom of firms to obtain economic resources, to
use those resources to produce products of the firm's own choosing, and to sell
their products in markets of their choice
Freedom of Choice - The freedom of owners of property resources to employ or
dispose of them as they see fit, of workers to enter any line of work for which they
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