AP Macro Economics Unit 5

The US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes. 
Which country has the comparative advantage in producing trucks and what is their opportunity cost? 

• Japan, 1/3 airplane per truck

• US, 1/2 airplane per truck

• US, 2 airplanes per truck

• Japan, 3 airplanes per truck

The US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes. 
Which country has the comparative advantage in producing airplanes and what is their opportunity cost? 

• Japan, 1/3 trucks per airplane

• US, 1/2 trucks per airplane

• US, 2 trucks per airplane

• Japan, 3 trucks per airplane

What does the Production Possibilities Frontier represent? 

•   A catalog of all possible production options, represented as percentages.

•  The tradeoffs between possible production levels for two goods.

•  The amount that a society could produce if it devoted all its resources to producing one good.

•  The possible gains from international trade in two or more goods.

Refer to the above diagram. This economy will experience cyclical unemployment if it produces at point:

• A

• B

• C

• D

Refer to the above diagram. At which point will this economy NOT be able to produce, it is currently unattainable?

• A

• B

• C

• E

When the price of a product rises, consumers shift their purchases to other products whose prices are now relatively lower. This statement describes:

• an inferior good.

• the rationing function of prices.

• the substitution effect.

• the income effect.

Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in supply may have been caused by:

• an increase in the wages paid to workers producing this good.

• the development of more efficient machinery for producing this commodity.

• this product becoming less fashionable.

• an increase in consumer incomes.

What is the primary focus of Unit 5 in AP Macro Economics?

• Monetary Policy

• Fiscal Policy

• International Trade

• Economic Growth

Which of the following is a tool of fiscal policy?

• Open market operations

• Discount rate

• Government spending

• Reserve requirements

What is the main goal of expansionary fiscal policy?

• Reduce inflation

• Increase unemployment

• Stimulate economic growth

• Decrease government debt