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AP Macroeconomics Vocabulary Terms Exam Questions and Answers
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AP Macroeconomics Vocabulary Terms Exam Questions and Answers
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AP Macroeconomics Vocabulary TermsExam Questions and Answers
Economics ii- iiAnswers ii-the iistudy iiof iihow iipeople, iifirms iiand iisocieties iiuse iitheir
iiscarce iiproductive iiresources iito iibest iisatisfy iitheir iiunlimited iimaterial iiwants
Resources ii- iiAnswers ii-called iifactors iiof iiproduction, iithese iiare iicommonly iigrouped
iiinto iithe ii4 iicategories iiof iilabor, iiphysical iicapital, iiland iior iinatural iiresources, iiand
iientrepreneurial iiability
Scarcity ii- iiAnswers ii-the iiimbalance iibetween iilimited iiproductive iiresources iiand
iiunlimited iihuman iiwants. iiBecause iieconomic iiresources iiare iiscarce, iithe iigoods iiand
iiservices iia iisociety iican iiproduce iiare iialso iiscarce
Trade iiOffs ii- iiAnswers ii-scarce iiresources iiimply iithat iiindividuals, iifirms, iiand
iigovernments iiare iiconstantly iifaced iiwith iidifficult iichoices iithat iiinvolve iibenefits iiand
iicosts
Opportunity iiCost ii- iiAnswers ii-the iivalue iiof iithe iisacrifice iimade iito iipursue iia iicourse iiof
iiaction
Maringal ii- iiAnswers ii-the iinext iiunit iior iiincrement iiof iian iiaction
Maringal iiBenefit ii- iiAnswers ii-the iiadditional iibenefit iireceived iifrom iithe iiconsumption
iiof iithe iinext iiunit iiof iia iigood iior iiservice
Marginal iiCost ii- iiAnswers ii-the iiadditional iibenefit iireceived iifrom iithe iiconsumption iiof
iithe iinext iiunit iiof iia iigood iior iiservice
Marginal iiAnalysis ii- iiAnswers ii-making iidecisions iibased iiupon iiweighing iithe iimarginal
iibenefits iiand iicosts iiof iithat iiaction. iiThe iirational iidecision iimaker iichooses iian iiaction iiif
iithe iiMB iiis iigreater iithan iior iiequal iito iimarginal iicost
Production iiPossibilities ii- iiAnswers ii-different iiquantities iiof iigoods iithat iian iieconomy
iican iiproduce iiwith iia iigiven iiamount iiof iiscarce iiresources. iiGraphically, iithe iitrade-off
iibetween iithe iiproduction iiof iitwo iigoods iiis iiportrayed iias iia iiproduction iipossibility
iicurve iior iifrontier ii(PPF)
, Production iiPossibility iiFrontier ii- iiAnswers ii-a iigraphical iiillustration iithat iishows iithe
iimaximum iiquantity iiof iione iigood iithat iican iibe iiproduced, iigiven iithe iiquantity iiof iithe
iiother iigood iibeing iiproduced
Law iiof iiIncreasing iiCosts ii- iiAnswers ii-the iimore iiof iia iigood iithat iiis iiproduced, iithe
iigreater iithe iiopportunity iicost iiof iiproducing iithe iinext iiunit iiof iithe iigood
Absolute iiAdvantage ii- iiAnswers ii-this iiexists iiif iia iiproducer iican iiproduce iimore iiof iia
iigood iithan iiall iiother iiproducers
Comparative iiAdvantage ii- iiAnswers ii-a iiproducer iihas iicomparative iiadvantage iiif iihe
iican iiproduce iia iigood iiat iilower iiopportunity iicost iithan iiall iiother iiproducers
Specialize ii- iiAnswers ii-when iifirms iifocus iitheir iiresources iion iiproduction iiof iigoods iifor
iiwhich iithey iihave iicomparative iiadvantage, iithey iiare iisaid iito iibe iispecializing
Productive iiEfficiency ii- iiAnswers ii-Production iiof iimaximum iioutput iifor iia iigiven iilevel
iiof iitechnology iiand iiresources. iiAll iipoints iion iithe iiPPF iiare iiproductively iiefficient
Allocative iiEfficiency ii- iiAnswers ii-Production iiof iithe iicombination iiof iigoods iiand
iiservices iithat iiprovides iithe iimost iinet iibenefit iito iisociety. iiThe iioptimal iiquantity iiof iia
iigood iiis iiachieved iiwhen iithe iiMB ii= iiMC iiof iithe iinext iiunit. iiThis iionly iioccurs iiat iione
iipoint iion iithe iiPPF
Economic iiGrowth ii- iiAnswers ii-this iioccurs iiwhen iian iieconomy's iiproduction
iipossibilities iiincrease. iiIt iican iibe iia iiresult iiof iimore iiresources, iibetter iiresources, iior
iiimprovements iiin iitechnology
Market iiEconomy ii(Capitalism) ii- iiAnswers ii-An iieconomic iisystem iibased iiupon iithe
iifundamentals iiof iiprivate iiproperty, iifreedom, iiself-interest, iiand iiprices
Law iiof iiDemand ii- iiAnswers ii-Holding iiall iielse iiequal, iiwhen iithe iiprice iiof iia iigood
iirises, iiconsumers iidecrease iitheir iiquantity iidemanded iifor iithat iigood.
All iiElse iiEqual ii- iiAnswers ii-to iipredict iihow iia iichange iiin iione iivariable iiaffects iia
iisecond, iiwe iihold iiall iiother iivariables iiconstant. iiThis iiis iialso iireferred iito iias iithe
iiceteris iiceteris iiparibus iiassumption
Absolute ii(Money) iiPrices ii- iiAnswers ii-The iiprice iiof iia iigood iimeasured iiin iiunits iiof
iicurrency
Relative iiPrices ii- iiAnswers ii-the iinumber iiof iiunits iiof iiany iiother iigood iiY iithat iimust iibe
iisacrificed iito iiacquire iithe iifirst iigood iiX. iiOnly iirelative iiprices iimatter
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