AP Macroeconomics Questions And Answers
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 a...
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
Capital The machines, tools, and equipment used to make other goods and services
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 those markets to
, AP Macroeconomics Questions And Answers
allocate the economy's scarce resources and to communicate and coordinate the decisions made
by consumers, firms, and resource suppliers
Circular Flow Diagram
Economic System A set of institutions and a coordinating mechanism to respond to the
economizing problem for an economy
Competition The struggle among producers for the dollars of consumers
Market Any arrangement that allows buyers and sellers to exchange things
Division of Labor/Specialization When workers devote themselves to doing what they're
best at, increasing the efficiency of the firm and of the economy
Money Anything that serves as a medium of exchange, a unit of account, and a store of
value
, AP Macroeconomics Questions And Answers
"Invisible Hand" The term economists use to describe the self-regulating nature of the
marketplace
Households One or more persons occupying a housing unit
Businesses Economic entities (firms) that purchase resources and provide goods and
services to the economy.
Sole Proprietorship Business owned and operated by a single person
Corporation A business owned by stockholders who share in its profits but are not
personally responsible for its debts
Product Market The market in which households purchase the goods and services that
firms produce
Resource Market A market in which households sell and firms buy resources or the
services of resources
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