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AP Macroeconomics Unit 1 Exam with correct Answers
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AP Macroeconomics Unit 1 Exam with correct Answers
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AP Macroeconomics: Unit 1 Exam withcorrect Answers
economics ii- iiAnswers ii--the iistudy iiof iihow iia iisociety iisatisfies iiits iiunlimited iiwants
iiwith iilimited iiresources
-"the iidismal iiscience"
macroeconomics ii- iiAnswers ii-study iiof iieconomics iiof iithe iiwhole ii(aggregate:
iinationwide)
ex: iiFederal iiReserve iiFiscal iiPolicy
microeconomics ii- iiAnswers ii-study iiof iieconomics iithrough iithe iibehavior iiof iiindividuals
iiand iimarkets
the iiUnited iiStates iieconomic iisystem ii- iiAnswers ii-mixed; iicapitalism iiAND iisocialism
mercantilism ii- iiAnswers ii--before iiAdam iiSmith
-Adam iiSmith iiattacked iithis
-governments iicontrolled iiall iieconomic iidecisions, iiprices, iimarkets, iiwho iicould iiimport,
iiand iiwho iicould iiexport
-for iithe iibenefit iiof iithe iiroyal iifamily
The iiWealth iiof iiNations ii- iiAnswers ii--book iithat iidescribes iicapitalism
-written iiin ii1776 iiby iiAdam iiSmith
-creates iiclassical, iifree-market iieconomics
the iithree iiimportant iiteachings iiof iiAdam iiSmith ii- iiAnswers ii-1. iilaissez iifaire: ii"let iiit
iibe"; iigovernments iishould iistay iiout iiof iibusiness
2. iiindividualism: iipeople iihave iithe iiright iito iimake iiand iienjoy iiprofits
3. iithe ii"invisible iihand": iisupply iiand iidemand iishould iiset iiprices, iinot iithe iigovernment;
iiif iiprices iiare iiset iitoo iihigh, iimarket iiforces ii(consumers) iiwill iiforce iithe iiprices iito iibe
iilowered
laissez-faire ii- iiAnswers ii--"let iiit iibe"
-governments iishould iistay iiout iiof iibusiness
individualism ii- iiAnswers ii-people iihave iithe iiright iito iimake iiand iienjoy iiprofits
, the ii"invisible iihand" ii- iiAnswers ii--supply iiand iidemand iishould iiset iiprices, iinot iithe
iigovernment
-if iiprices iiare iiset iitoo iihigh, iimarket iiforces ii(consumers) iiwill iiforce iithe iiprices iito iibe
iilowered
scarcity ii- iiAnswers ii-shortage ii(not iienough iisupply)
abundance ii- iiAnswers ii-surplus ii(more iithan iienough iisupply)
needs iivs. iiwants ii- iiAnswers ii-needs ii= iiessentials ii(food iihouse, iiclothing)
wants ii= iieverything iielse
four iifactors iiof iiproduction ii- iiAnswers ii-1. iiland ii(resources)
2. iilabor ii(human iiinput)
3. iicapital ii(investment, iioverhead)
4. iientrepreneurship ii(economic iimotivation)
*in iia iifree iimarket iisystem, iithe iifactors iiof iiproduction iiare iiowned iiby iiindividuals
opportunity iicost ii- iiAnswers ii-the iicost iiof iigiving iisomething iiup iiin iiorder iito iido
iisomething iielse ii(single iihighest iicost)
1. iiidentify iithe iiresource iibeing iiused
2. iithe iicost iiof iithe iiresource iiis iiequal iito iigiving iiup iithe iinext iibest iialternative iiuse iiof
iithe iiresource
macroeconomics iibasic iiquestions ii- iiAnswers ii-What iishould iibe iiproduced? ii(How
iishould iiscarce iiresources iibe iiused?)
-command: iigovernment
-free iimarket: iisupplies
How iishould iiit iibe iiproduced? ii(Labor iior iicapital iiintensive?)
-command: iigovernment
-free iimarket: iilowest iicost
From iiwhom iishould iiit iibe iiproduced?
-command: iigovernment
-free iimarket: iidemand
command iieconomies ii- iiAnswers ii--the iibasic iimacroeconomics iiquestions iiare
iianswered iiby iithe iistate
-no iiprivate iiproperty
-no iiright iito iimake iiand iienjoy iiprofits
-big iiproblem: iino iipersonal iiincentive; iino iieconomic iimotivation
socialism/communism ii- iiAnswers ii--economic iiequality
-share iiprofits
fascism ii- iiAnswers ii--all iiprofits iigo iito iithe iigovernment iito iimake iithe iicountry iistronger
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