AP Econ Exam (PG 1 & 2)

Suppose the consumer price index (CPI) was 100 on January 1st, 2017 and 110 on January 1st, 2018 with no changes in nominal wages. Which of the following is definitely true about the economy between January of 2017 and January of 2018?

The inflation rate was 10 percent.

Use the table to answer the question below. Anderson add picture from Unit 1 Progress Check: question 16 When the price of a candy bar is $6.00$6.00, which of the following is true?

The market does not clear because the price is higher than the equilibrium price and there will be a surplus in the market.

Which statement is true about the circular flow diagram of an economy?

The market for factors of production connects spending by firms to household income.

When an economy is at the trough of the business cycle, which of the following is then true about the state of the economy?

There is a recessionary gap.

Two nations sign a trade agreement expecting to enjoy mutual gains from the trade of a certain good. How will this event likely affect the supply of the good in the two nations?

This event will likely cause an increase in the supply of the good in both nations.

Which of the following will happen when the actual inflation rate exceeds the expected inflation rate?

This will harm lenders with fixed-interest rate loans.

Suppose Miguel wants to know the value of real gross domestic product (GDP) for 2011 in terms of the base year 1984 dollars. In 1984 nominal GDP was $10 billion. In 2011 nominal GDP was $15 billion and the price deflator was 200. Real GDP in 1984 dollars would be equal to which of the following?

$7.5 Billion

Use the table to answer the question below. Anderson add picture from Unit 1 Progress Check: question 7 The table above shows the maximum amount of trucks or coffee that China and Malaysia can produce using the same amount of resources. Based on the data provided, which of the following terms of trade are mutually beneficial for the two countries?

1 ton of coffee for 4 trucks

Anderson add picture from Unit 2 Progress Check: question 3 Calculate Country X's nominal gross domestic product (GDP) for 2017 using the expenditures approach.

19 billion dollars

Use the given production possibilities curve (PPC) to answer the following question. Anderson add picture from Unit 1 Progress Check: question 5 A city government received a $1 million grant to build swimming pools and skating rinks for youth. Based on the data provided in the graph, what is the opportunity cost of building one swimming pool?

2 skating rinks

The business cycle diagram below shows the cyclical movement of actual real GDP relative to potential real GDP over time for the nation of Fisherland. Anderson add picture from Unit 2 Progress Check: question 20 The economy of Fisherland is at full employment for which year in the above diagram?

2015

Which of the following terms describes a slowdown in the rate of increase in the consumer price index?

Disinflation

Which of the following is true about gross domestic product (GDP)?

Calculations of GDP include the unsold inventories of goods produced within the borders of the country.

Which of the following describes a limitation of gross domestic product (GDP)?

It does not account for the distribution of income in a nation or income inequality.

Country X is a major buyer of Country Y's grains. Assume Country X's government announced an increase in taxes on its imports of Country Y's grains effective next month. How will this news likely affect consumers' demand for grains in Country X?

It will increase now because the tax on imported grains will increase the future price of grains.

Jan works a 30-hour week for a minimum wage of $10 per hour. Suppose that last year is the base year for the Consumer Price Index (CPI). Which of the following is true about Jan's real wage if at the end of this year the CPI is 125 ?

Jan's real wage is $8 per hour at the end of the year.

Use the graphs to answer the question below. Anderson add picture from Unit 1 Progress Check: question 6 What type of opportunity costs do PPC1 and PPC2 illustrate?

PPC1 illustrates increasing opportunity costs and PPC2 illustrates constant opportunity costs.

Which of the following describes the relationship between price and quantity supplied according to the law of supply?

Positive relationship, illustrated by an upward-sloping supply curve

Which of the following is the correct calculation of Real Gross Domestic Product (GDP)?

Real GDP=(Nominal GDP/GDP deflator)×100

Which of the following contributes to the economic problem of scarcity?

Resources are limited

Which of the following is classified as a discouraged worker?

Sara has been unable to find a job and abandoned her job search.

Allie is shopping when she finds a pair of running shoes priced at $90. When Allie uses her debit card to pay, it is declined because her balance is insufficient to cover the cost of the running shoes. Allie's situation best illustrates which economic concept?

Scarcity

Which of the following illustrates the effect of a decrease in an economy's resources using a production possibilities curve (PPC)? Anderson add picture from Unit 1 Progress Check: question 4

The economy's PPC will shift inward and to the left.

Assume household income has fallen dramatically in Country X and the cost of construction materials for building new houses has increased. How will these changes affect the equilibrium price and equilibrium quantity for new houses?

The equilibrium price will be indeterminate, and the equilibrium quantity will decrease.

Matcha green tea is primarily cultivated by Japanese farmers. Suppose that Matcha green tea grows in popularity as its health benefits, namely its lower caffeine content, become known, and at the same time the government reduces taxes imposed on Japanese tea farmers. What is the likely effect on the equilibrium price and equilibrium quantity in the Japanese Matcha tea market?

The equilibrium price will be indeterminate, and the equilibrium quantity will increase.

Which statement is true about the approaches used to measure the value of a nation's gross domestic product (GDP)?

The expenditures approach to calculating GDP sums consumption spending, investment spending, government spending, and net exports.

The output gap is measured by which of the following?

The difference between actual and potential GDP.

Which of the following will increase the market supply for new automobiles?

An increase in subsidies to automobile manufacturers

Which of the following changes will increase the demand for bicycles?

An increase in the price of scooters, a substitute good

Michael and Martha run a mechanic shop. In one hour Michael can perform eight oil changes or change ten tires. In one hour Martha can perform seven oil changes or change fourteen tires. Michael and Martha have the same amount of resources. Given this information which of the following is true?

Michael has an absolute and a comparative advantage in changing oil.

Last year, Myron purchased a $10,000 certificate of deposit with a fixed 3% interest rate from his bank. The government reported that prices, on average, have fallen by 5% during the current year. Which of the following can be concluded as a result of this transaction?

Myron gains, while the bank loses.

Which of the following describes the relationship between price and quantity demanded according to the law of demand?

Negative relationship, illustrated by a downward-sloping demand curve

Which of the following describes a difference between nominal gross domestic product (GDP) and real GDP?

Nominal GDP uses current prices to measure the value of final output, while real GDP uses constant prices.

The table below shows the landscaping productivity of Simone and Irina during an eight hour workday with the same amount of resources. Simone can mow twelve lawns or trim twenty-four trees in eight hours. Irina can mow nine lawns or trim twelve trees in eight hours. Anderson add picture from Unit 1 Progress Check: question 9 Based on the information in the table, which of the following is true?

Simone has an absolute advantage in trimming trees and mowing lawns.

Which of the following is not considered an economic resource?

Stocks

What type of unemployment describes the situation of factory workers displaced by automation?

Structural

Anderson add picture from Unit 2 Progress Check: question 9

The LFPR is 60% and the UR is 10.0%.

As a measure of economic performance, the United States gross domestic product (GDP) accounts for which of the following?

The cleanup of an oil spill

Labor unions negotiated a 3-year contract with employers in the automobile industry. They agreed to a 3 percent per year increase in pay over the 3 years. How would each group be affected by an actual inflation rate of 4% next year?

Workers would be worse off, and the employers would be better off.