The unemployment rate is the

percentage of the labor force that is out of work

Economics can be defined as

scarce resources and unlimited wants

The tools of monetary policy are

reserve ratio, discount rate, open market operations

Specialization & division of labor enhances efficiency by

allowing workers to take advantage of differences in skills

entails exchange of goods for goods

producers offer more of a product at higher prices

The money supply is backed by

government's ability to control its supply and value

yields widespread benefits to the society

If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent

cyclical unemployment is four percent

The production of durable goods varies more than the production of nondurable goods because

durable good purchases are postponable

brings together buyers and sellers

aggregate prices are rising, though some may be falling

consists of the accumulation of historic debts & surpluses

can be found by summing C + Ig + G + Xn

Invisible Hand Theory refers to

decisions motivated by self-interest serve societal interest

Spillover benefits refer to

benefits that accrue to parties other than buyer & seller

The three legal forms of business are

proprietorships, partnerships, corporations

monetary value of all finished goods and services

Real GDP per capita is found by

dividing real GDP by population

Open-market operations refers to

purchase or sale of securities by the Fed

The market system fails to produce public goods because

sellers cannot restrict access to consumers willing to pay

Principal-agent problem is that

goals of managers may not match goals of owners

Discretionary fiscal policy refers to

changes in taxes and spending to stabilize the economy

Money contributes to economic efficiency because

it promotes specialization by overcoming problems of barter

In the theory of comparative advantage, a good should be produced in the nation where

its cost in terms of lost alternative production is least

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AP Eco Final Exam Review

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Review for AP Macroeconomics final exam

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Questions 50

Answers

1
The unemployment rate is the
percentage of the population that is out of work
percentage of the labor force that is out of work
ratio of unemployed to employed workers
number of employed workers plus those not in the labor force
2
Economics can be defined as
positive and normative analysis
scarce resources and unlimited wants
supply and demand
the analysis of fact versus opinion
3
Expansionary fiscal policy is so named because it
is designed to expand GDP
expands the size and reach of the government
is aimed at achieving price stability and larger incomes
involves expansion of the money supply
4
Which of the following constitute "natural" unemployment?
voluntary and mandatory
structural and frictional
frictional and cyclical
cyclical and structural
5
Relationship of qty supplied and price is __; relationship of qty demanded and price is __
inverse, direct
direct, direct
inverse, inverse
direct, inverse
6
The tools of monetary policy are
Luke, Han, and Chewie
a wrench, a rope, and a chancla
spending, taxation, and transfers
reserve ratio, discount rate, open market operations
7
Specialization & division of labor enhances efficiency by
reducing worker expertise
giving workers a broad base of skills
allowing workers to take advantage of differences in skills
creating lost time as workers shift from one task to another
8
The phase of the business cycle in which real GDP declines is called
the senior year
recovery/expansion
the trough
the recession
9
Barter
entails exchange of goods for goods
is the primary means of exchange in the US
circumvents the lack of coincidence of wants
removes inefficiencies inherent in monetary economies
10
"Search" and "Wait" unemployment are types of
structural unemployment
cyclical unemployment
frictional unemployment
teenage unemployment
11
Law of supply states
consumers buy more of a good at higher prices
producers offer more of a product at higher prices
consumers buy more of a good at lower prices
producers offer more of a product at lower prices
12
The money supply is backed by
Chuck Norris
government's ability to control its supply and value
bonds
gold and silver bullion
13
Double taxation occurs in
marriage
sole proprietorship
partnership
corporation
14
The amount by which government expenditures exceed revenues during a particular year is the
budget deficit
public debt
gap
Bush Effect
15
A public good
has no spillovers associated with it
yields widespread benefits to the society
yields benefits only to those who buy it
typically involves usage fees
16
If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent
how many pizzas will fit on the roof of the house?
cyclical and structural unemployment are 14 percent
cyclical unemployment is four percent
frictional unemployment is five percent
17
During a serious recession, output falls the most in
clothing industry
healthcare industry
construction industry
agriculture
18
The production of durable goods varies more than the production of nondurable goods because
durable good purchases are postponable
nondurable goods are nondurable and are, thus, not durable
durable good purchases are nonpostponable
durable good production is more competitive
19
Unemployment involving mismatch of skills is called
cyclical
the real world
frictional
structural
20
A market
requires face-to-face interaction
cannot exist in a vacuum
brings together buyers and sellers
requires a physical location
21
Inflation means that
incomes are rising
aggregate prices are rising, though some may be falling
the fire is rising
all prices are rising at the same rate
22
The US public debt
combines the debt of local, state, and federal governments
combines the total household and government debt
is not really that big a deal.
consists of the accumulation of historic debts & surpluses
23
A nation's GDP
is derived by integrating the tangent as it inverts
can be found by summing C + Ig + G + Xn
can be found by subtracting revenues from expenditures
is the dollar value of the output of its citizens
24
Which of the following is not a characteristic of the market system
competition for resources
private property
government ownership
free enterprise
25
Invisible Hand Theory refers to
the ability of monopolistic sellers to raise prices
the fact that government controls economic functions
decisions motivated by self-interest serve societal interest
the redistributive effect of taxation and transfer payments
26
The Fed can change the money supply by
changing the discount rate to alter borrowing from the Fed
changing the legal reserve ratio
changing bank reserves through buying/selling securities
all of these things
27
The labor force includes
the baby
employed and unemployed people
full-time but not part-time workers
permanent but not temporary employees
28
Spillover benefits refer to
benefits suppliers obtain from sale of a good
benefits consumers receive from purchasing a good
benefits accrued in a voluntary transaction
benefits that accrue to parties other than buyer & seller
29
Limited liability applies to
proprietorships
partnerships
corporations
Wilson
30
In descending order of size, households divide their income among
taxes, consumption, saving
saving, taxes, consumption
chips, salsa, sweet tea
consumption, taxes, saving
31
The three legal forms of business are
vertical, horizontal, and inverted
conglomerates, multinationals, partnerships
monopolists, cooperatists, collaborators
proprietorships, partnerships, corporations
32
Economic growth is defined as an increase in
nominal GDP
circumference
real GDP (per capita)
consumption
33
When prices change, people buy more of the cheaper good and less of the expensive good, this is
supplementary effect
substitution effect
price effect
complementary effect
34
Pollution
is a liberal myth
is a resource
is a spillover cost
is external to the market system
35
The GDP is the
national income minus national expenditures
monetary value of all economic resources used
monetary value of all finished goods and services
monetary value of all goods: final, used, and intermediate
36
Real GDP per capita is found by
dividing real GDP by population
dividing population by real GDP
subtracting the labor force from the population
inverting GDP and integrating the derivative of population
37
Fiscal policy is carried out primarily by
local governments
Wilson
the federal government
state governments
38
Open-market operations refers to
all of these things
purchase or sale of securities by the Fed
central bank lending to commercial banks
purchases of stock by banks
39
Money is not an economic resource because
money is not productive
money is not found in nature
it IS an economic resource
money is not accepted worldwide
40
The market system fails to produce public goods because
they are prohibitively expensive
public enterprises are more efficient than private ones
sellers cannot restrict access to consumers willing to pay
there is no demand for public goods
41
Principal-agent problem is that
goals of managers may not match goals of owners
corp owners (principals) conflict with government (agent)
Govt agents tax dividends paid to stockholders (principals)
managers (principals) do not understand duties of the agents
42
In the United States monetary policy is the responsibility of
the Federal Reserve System
the Congress
the US Treasury
Chuck Norris
43
Upswings and downswings in the economy's real GDP over time are called
mood swings
inversionary oscillations
the yo-yo effect
business cycles
44
When a decrease in the price of a good increases the demand for another good that is
supplementary effect
price effect
substitution effect
complementary effect
45
Discretionary fiscal policy refers to
changes in taxes and transfers that occur as GDP changes
Presidential authority to change tax rates
any destabilizing action taken by government
changes in taxes and spending to stabilize the economy
46
Money contributes to economic efficiency because
it promotes specialization by overcoming problems of barter
government intervention can be avoided by using money
it is an economic resource
it enables "roundabout production"
47
Macroeconomics is at the level of
firms
the entire economy
the government
individuals
48
In the theory of comparative advantage, a good should be produced in the nation where
its absolute cost in terms of money is lowest
its cost in terms of lost alternative production is least
sheep at the top of the hill, corn at the bottom
its absolute cost in terms of resources is least
49
An owner's liability for the debts of a business is
limited in a corporation to assets of bondholders
limited in corporation to assets of preferred stockholders
limited to the owner's investment in a proprietorship
unlimited in a partnership
50
Money functions as
all of these
store of value
medium of exchange
unit of account

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