Which of the following statements is true?

We use economics whenever we make decisions.

Which of the following describes a recessionary gap?

The "opposite" of an inflationary gap

Which of the following is true of the wealth effect?

Cause for the downward slope of the aggregate demand curve

Which of the following would cause a shift of the consumption function?

an increase in real assets and money holdings

Which of the following is an example of normative economic thinking?

Government spending should be higher to boost the economy.

Which of these factors shifts the demand curve?

A decrease in the price of a substitute

To acquire as much clout as is humanly possible, In order to fund our investment in additional capital

What is absolute advantage?

The ability to produce more efficiently than all competitors

What is an inflationary gap?

The amount by which equilibrium GDP exceeds potential output

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AP Macro Midterm Review

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Created by Jason H., Vincent Q., and Immanuel W.

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Questions 20

Answers

1
Which of the following statements is true?
Choices must be made because of the laws of physics.
Entrepreneurship is not a factor of production.
We do not use economics in our everyday lives.
We use economics whenever we make decisions.
2
Which of the following statements is true?
Unemployment Rate = (1 - Employment Rate) * 100
None of the above
The unemployed are considered to be those without a job
A truly healthy economy will have an unemployment rate of 0%
3
Which of the following describes a recessionary gap?
None of the above
The "opposite" of an inflationary gap
The amount by which equilibrium GDP exceeds potential output
The level of inflation during a recession
4
Which of the following is NOT a financial asset?
A bond
A loan
A bank
Stocks
5
Which of the following is true of the wealth effect?
Cause for the upward slope of the aggregate supply curve
Cause for the random variability in the consumption function
Cause for the downward slope of the aggregate demand curve
None of the above
6
What is GDP per capita?
GDP/population
GDP/# of nation's capitals
GDP/minimum wage
GDP/price level
7
Which of the following would cause a shift of the consumption function?
a quantifiable decrease in disposable income
either would cause a shift of the consumption function
an increase in real assets and money holdings
neither would cause a shift of the consumption function
8
Which of the following is NOT a part of the GDP equation?
Government Spending
Consumption
Price Index
Exports
9
What does MPC stand for?
Minimal Price Consumption
Marginal Propensity to Customer
Marginal Propriety to Consume
Marginal Propensity to Consume
10
Which of the following is an example of normative economic thinking?
Government spending is too high.
Gov't. spending is too high, and it's hurting the economy.
Government spending should be higher to boost the economy.
Government spending is too low.
11
Which of the following is NOT a determinant of aggregate supply?
Technology
Productivity
Consumption Expenditures
Price of Resources
12
Which of these factors shifts the demand curve?
An increase in price
A decrease in the price of a substitute
A decrease in quantity
An increase in supply
13
Why must we borrow?
To avoid a budget deficit
To acquire as much clout as is humanly possible
To avoid a budget surplus
In order to fund our investment in additional capital
14
What does CPI stand for?
Customer Payment Index
Consumer Payment Index
Customer Payment Inventory
Consumer Price Index
15
Which of the following is NOT a factor of production?
Consumers
Labor
Land
Entrepreneurship
16
What is the difference between nominal and real GDP for a given year?
The quantity sold used
The tax rate used
All of the above
The price level used
17
What is absolute advantage?
The ability to produce more efficiently than all competitors
The ability to produce with the highest opportunity cost
None of the above
The ability to produce with the lowest opportunity cost
18
Which of the following is NOT a type of unemployment?
Frictional
None of the above
Cylindrical
Structural
19
What is an inflationary gap?
The amount by which potential output exceeds equilibrium GDP
The amount by which equilibrium GDP exceeds potential output
Difference between 0% inflation and inflation at equilibrium
None of the above
20
In what ways are the supply and demand curves sloped (supply, demand)?
Positive, Positive
Positive, Negative
Negative, Positive
Directly, Indirectly

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