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AP Macroeconomics Definitions Exam Questions and Answers
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AP Macroeconomics Definitions ExamQuestions and Answers
What iiis iithe iidifference iibetween iiabsolute iiand iicomparative iiadvantage? ii- iiAnswers ii-
Absolute iiadvantage iimeans iiproducing iia iigood iiusing iiless iiresources.
Comparative iiadvantage iimeans iiproducing iia iigood iiat iia iismaller iiopportunity iicost.
What iiis iithe iidifference iibetween iia iichange iiin iidemand iiand iia iichange iiin iiquantity
iidemanded? ii- iiAnswers ii-A iichange iiin iidemand iiis iia iishift iiof iithe iidemand iicurve
iieither iileft iior iiright.
A iichange iiin iiquantity iidemanded iiis iimovement iialong iian iiexisting iidemand iicurve.
What iiis iithe iidifference iibetween iia iichange iiin iisupply iiand iia iichange iiin iiquantity
iisupplied? ii- iiAnswers ii-A iichange iiin iisupply iiis iia iishift iiof iithe iisupply iicurve iieither iileft
iior iiright.
A iichange iiin iiquantity iisupplied iiis iimovement iialong iian iiexisting iisupply iicurve.
What iiis iiscarcity? ii- iiAnswers ii-Scarcity iioccurs iiwhen iipeople iiwant iimore iiof
iisomething iithan iiis iireadily iiavailable iiand iiit iiforces iipeople iito iimake iichoices.
What iiare iitrade-offs? ii(Opportunity iiCost) ii- iiAnswers ii-A iitrade-off iiis iian iialternative
iithat iiis iisacrificed iiwhen iia iidecision iiis iimade.
What iiis iiunemployment? ii- iiAnswers ii-Unemployment iiincludes iiall iipeople iiwho iiare
iisixteen iiand iiolder, iiwho iiare iiactively iisearching iifor iiwork, iiand iicannot iifind iia iijob.
What iiis iieconomic iigrowth? ii- iiAnswers ii-Economic iigrowth iiis iian iiincrease iiin iithe
iicapacity iito iiproduce iigoods iiand iiservices iicompared iifrom iione iitime iito iianother.
What iiis iia iicontraction? ii- iiAnswers ii-A iicontraction iiis iia iiphase iiin iithe iibusiness iicycle
iithat iisignals iithe iislowing iiof iieconomic iigrowth. iiAlso iicalled iia iirecession, iiit iiis
iiaccompanied iiby iiunemployment.
What iiis iia iitrough? ii- iiAnswers ii-A iitrough iiis iia iiphase iiin iithe iibusiness iicycle iithat iiis
iithe iilowest iipoint iiin iia iirecession, iioften iicalled iia iidepression.
, What iiis iiexpansion? ii- iiAnswers ii-Expansion iiis iia iiphase iiin iithe iibusiness iicycle iithat iiis
iithe iiincline iiof iieconomic iigrowth iiafter iia iitrough. iiIt iiis iiaccompanied iiby iiinflation.
What iiis iia iipeak? ii- iiAnswers ii-A iipeak iiis iia iiphase iiin iithe iibusiness iicycle iiafter iian
iiexpansion iiwhere iithe iieconomy iiis iiat iiits iihighest. iiIt iiis iifollowed iiby iia iicontraction.
What iiis iia iiproduction iipossibilities iicurve? ii(PPC) ii- iiAnswers ii-The iiPPC iiis iia iigraphical
iirepresentation iiof iithe iialternative iiamounts iiof iitwo iigoods iiand iiservices iithat iian
iieconomy iican iiproduce iiby iitransferring iiresources iifrom iione iigood iior iiservice iito
iianother. iiAnything iiwithin iithe iiPPC iican iibe iiobtained iialthough iiinefficient. iiOnly iion
iithe iicurve iiis iiwhere iiresources iiare iibeing iiused iiat iimaximum iipotential.
What iiis iithe iimarket iisystem? ii- iiAnswers ii-The iisocial iinetwork iithat iipermits
iiinteractions iibetween iibuyers iiand iisellers. iiThis iiis iiwhere iipeople iibid, iiauction, iihold iia
iiblack iimarket, iisell iireal iiestate, iiand iiit iiincludes iithe iistock iimarket.
What iiis iisupply? ii- iiAnswers ii-The iitotal iiamount iiof iia iigood iior iiservice iiavailable iifor
iipurchase iiat iiany iispecified iiprice.
What iiis iidemand? ii- iiAnswers ii-Desire iifor iia iicertain iigood iior iiservice iisupported iiby
iithe iicapacity iito iipurchase iiit.
What iiare iithe iideterminants iiof iidemand? ii- iiAnswers ii-The iideterminants iiof iidemand
iiare:
1) iiTastes iiand iiPreferences
2) iiIncome/Budget iiRestraint
3) iiRelative iiprices iiof iisubstitutes iiand iicomplementary iigoods
4) iiNumber iiof iiconsumers/buyers
5) iiExpectations iiabout iithe iifuture
What iiare iithe iideterminants iiof iisupply? ii- iiAnswers ii-The iideterminants iiof iisupply iiare:
1) iiRelative iiprices iiof iisubstitutes iiand iicomplementary iigoods
2) iiNumber iiof iisuppliers
3) iiProduction iifunction iiand iitechnology
4) iiPrices iiof iidifferent iiinputs ii(wage iirates, iiinterest)
5) iiProducer's iifuture iiexpectations
What iiis iian iiequilibrium iiprice? ii- iiAnswers ii-The iiequilibrium iiprice iiis iithe iiprice iiwhere
iigoods iiand iiservices iisupplied iiby iithe iiproducer iiequals iithe iigoods iiand iiservices
iidemanded.
What iiis iian iiequilibrium iiquantity? ii- iiAnswers ii-The iiequilibrium iiquantity iiis iithe
iiquantity iidemanded iiand iisupplied iiat iithe iiequilibrium iiprice; iiwhere iidemand iimeets
iisupply.
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