AP Macro Economics Unit 5

Refer to Figure A (note: x axis should NOT be valued in $). At a price of $20, which of the following would occur?

• Shortage of 100

• Shortage of 150

• Surplus of 200

• Surplus of 50

• Surplus of 100

Refer to figure A. What would be the effect of a price floor at $60

• It would be ineffective

• A shortage of 50

• Quantity demanded would increse

• a shortage of 100

• a surplus of 100

Which of the following is true for all economies regardless of their economic system?

• Every economy must determine what to produce and how it produces goods and services

• Every economy must find a way to distribute income equally

• Every economy must find ways to privatize markets to maximize efficiency

• Every economy must prevent unemployment through government intervention

• Every economy must open free trade with other economies

When making a decision, the next best alternative is called

• The production possibilities

• The opportunity cost

• Scarcity

• The absolute advantage

• Efficiency

It is the study of the nations economy as a whole.

• Microeconomics

• National economy

• National output

• Macroeconomics

The formula C+I+G+X represents ​ (a)   .

• Gross Domestic Product

• Nominal Imports

• Nominal Exports

• Gross International Product

The belief the government must manage the economy by spending more money when in a recession and cutting spending when there is inflation.

• Keynesian Economics

• Supply-Side Economics

Which of the following must be true if an individual's next best alternative to going to the beach is studying for an economics exam?

• They will decide to study for the exam

• The opp. cost is seeing their friends at the beach

• The person prefers playing volleyball at the beach to studying for the exam

• The Opp Cost of going to the beach is all the other things they could have done

• The Opp Cost of going to the beach is being better prepared for the exam.

Which of the following statements is correct?

• A decrease in the price of X will increase the demand for substitute product Y

• A decrease in income will decrease the demand for an inferior good

• An increase in income will decrease the demand for a normal good

• An increase in the price of X will decrease the demand for complementary product Y

• An increase in the price of X will increase the demand for complementary product Y

Which of the following best explains why many US economists support free trade?

• Workers who lose their jobs due to free trade can collect unemployment compensation

• it is more important to reduce global inflation than to reduce domestic unemployment

• workers are not affected by free trade since only domestic businesses suffer

• government can protect domestic industries while encouraging free trade