aggregate prices are rising, though some may be falling

Economics can be defined as

scarce resources and unlimited wants

The tools of monetary policy are

reserve ratio, discount rate, open market operations

entails exchange of goods for goods

Real GDP per capita is found by

dividing real GDP by population

Spillover benefits refer to

benefits that accrue to parties other than buyer & seller

Principal-agent problem is that

goals of managers may not match goals of owners

monetary value of all finished goods and services

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

consists of the accumulation of historic debts & surpluses

Specialization & division of labor enhances efficiency by

allowing workers to take advantage of differences in skills

yields widespread benefits to the society

The unemployment rate is the

percentage of the labor force that is out of work

brings together buyers and sellers

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

Invisible Hand Theory refers to

decisions motivated by self-interest serve societal interest

The market system fails to produce public goods because

sellers cannot restrict access to consumers willing to pay

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

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

durable good purchases are postponable

Open-market operations refers to

purchase or sale of securities by the Fed

The money supply is backed by

government's ability to control its supply and value

producers offer more of a product at higher prices

The three legal forms of business are

proprietorships, partnerships, corporations

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

cyclical unemployment is four percent

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

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