AP Macroeconomics Study Guide 1

The current rate of unemployment is 5%. This statement: A. is positive B. is normative C. involves a value judgment D. is a personal reflection and has no value in economics E. is testable hypothesis

A

A statement that says that the minimum wage needs to be increased is a: A. positive statement B. normative statement C. "other things equal" assumption D. scientific conclusion based on marginal analysis E. statement of fact

B

An example of a positive statement is: A. the rate of unemployment is 4% B. a high rate of economic growth is good for the country C. everyone in the country needs to be covered by national health insurance D. baseball players should not be paid higher salaries than the president of the United States E. tobacco should be classified as an illegal narcotic

A

In an attempt to reduce shooting deaths, some cities have offered money to people who turn in their guns. This program is an example of the government using ______ to influence behavior. A. incentives B. law C. marginal analysis D. the gains from trade E. the equity principle

A

Microeconomics deals with: A. the working of the entire economy or large sectors of it B. economic growth C. government economic policy D. gross domestic product E. individual units in the economy

A

Which of the following would be a normative economic statement? A. government has grown too large and should be reduced B. there has been an increase in the rate of inflation C. government is subject to the same rules as all other institutions D. all of these are normative economic statements E. none of these are normative statements

A

The study of a single firm and how it determines prices would fall under: A. macroeconomics B. mircoeconomics C. economic growth D. fiscal policy E. the Federal Reserve

B

We have to make choices because: A. we have unlimited income B. resources are scare C. choices involve a trade-off D. resources are scarce and because choices involve a trade-off E. marginal benefits never exceed marginal costs

B

When a chef creates a dinner plate of food for a customer, which of the following represents the physical capital resource? A. the chef himself/herself B. the oven C. the food ingredients D. the chef's training and experience E. the electricity required to heat the oven

B

Which of the following would be a positive economic statement? A. government has grown too large and should be reduced B. there has been an increase in the rate of inflation C. government should be subject to the same rules as all other institutions D. women should be paid as much as men for the same work E. corporate CEO's are overcompensated and corrupt

B

Zoe's grandparents are excited about finally paying off their mortgage, because, as they say, "Our cost of housing is now zero." Zoe should explain to them the economic principle of: A. marginal analysis: if the additional cost of housing is zero, then their additional benefit is also zero B. opportunity cost: by living in the house, they are giving up the opportunity to sell the house, buy a smaller one, and pocket the difference C. efficiency: if their cost of housing is now zero, they should let Zoe move in without charging her any rent, Zoe is better off, and her grandparents aren't hurt D. equity: it is unfair that some people are still paying off their mortgage E. negative externalitites: by living in the house, her grandparents are denying another family the enjoyment of living in the house

B

Khalil is offered a free ticket to the opera. His opportunity cost of going to the opera is: A. zero - the tickets were free B. the price listed on the ticket C. whatever Khalil would have done had he not gone to the opera D. the price listed on the ticket plus whatever Khalil would have done had he not gone to the opera E. the price listed on the ticket minus whatever Khalil could have received by selling it to another person in the parking lot

C

The basic concern of economics is: A. to keep business firms from losing money B. to prove that capitalism is better than socialism C. to study the choices people make D. to use unlimited resources to produce goods and services to satisfy limited wants E. to increase the amount of wealth in the economy

C

We are forced to make choices because of: A. exploitation B. efficiency C. scarcity D. the margin E. ceteris paribus

C

When we are forced to make choices we are facing the concept of: A. ceteris paribus B. free goods C. scarcity D. the margin E. positive and normative analysis

C

A friend comes up to you and offers to give you a free ticket to the local professional team's baseball game that night. You decide to attend the game. The game takes five hours and costs you $15 for transportation. If you had not attended the game, you would have worked at your part-time job for $8 an hour. What is the cost to you of attending the game? A. the cost is zero - the ticket is free B. $65 C. $40 D. $55 E. $23

D

Manny is attending college and majoring in economics. Manny is improving his scarce resource of: A. land B. labor C. capital D. human capital E. natural resources

D

You have one dollar to spend on a vending machine snack. A bag of chips will cost you $1 and the candy bar will also cost you $1. If you choose the bag of chips, the opportunity cost of buying the chips is: A. $1 plus the enjoyment you would have received from the candy bar B. $2 minus the enjoyment you received from the bag of chips C. $1 D. the enhoyment you would have received from the candy bar E. $2

D

How people choose among the alternatives available to them is: A. not part of the study of economics B. impossible to describe C. the study of microeconomics D. not important E. normative economics

E

Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is: A. $10,000 B. whatever she would have purchased with the $10,000 instead C. whatever she would have earned had she not been in college D. whatever she would have purchased with the $10,000 minus whatever she would have earned had she not been in college E. whatever she would have purchased with the $10,000 plus whatever she would have earned had she not been in college

E

To encourage young people to go to college within their home state, state universities can: A. charge higher tuition to in-state students B. award special scholarships to out-of-state students C. offer high-interest loans to in-state students D. offer discounted textbooks to out-of-state students E. offer lower tuition to in-state students

E

You can either spend $100 on a new economics textbook or a new CD player. If you choose to buy the new economics textbook, the opportunity cost is: A. $100 B. the new economics textbook C. both the $100 and the new CD player D. impossible to determine E. the new CD player

E