AP Macro Vocab Units 1-6

Which of the following best defines Economics?

• The study of how businesses maximize profits through market competition
• The social science that studies the choices of individuals, businesses, and governments as they deal with scarcity
• A field focusing on the historical development of global trade and resource distribution
• The study of how governments collect taxes to fund public services and infrastructure

What is the economic definition of Scarcity?

• Limited wants but an abundance of natural resources
• Unlimited wants and unlimited resources provided by the government
• Unlimited wants but only limited resources
• A situation where prices decrease due to a lack of consumer demand

How are Positive Statements characterized in economics?

• Statements that include value judgements and personal opinions
• Statements based on facts that avoid value judgements
• Statements that focus on what the economy should ideally look like
• Statements used to suggest policy changes to the government

What distinguishes Normative Statements from positive statements?

• They are based strictly on verifiable data and facts
• They involve value judgements and opinions
• They are calculations of GDP using the income approach
• They represent the actual dollar value of goods and services

What is the definition of Opportunity Cost?

• The total sum of all possible alternatives in a decision
• The financial cost of producing a specific consumer good
• The most desirable alternative given up when making a choice
• The interest paid on a loan for capital goods

In economic terms, what are Trade-offs?

• All the alternatives that are available when making a choice
• The specific result of choosing the single best option
• The process of exchanging capital goods for consumer goods
• The reduction in price for bulk purchases between businesses

What is the primary purpose of Consumer Goods?

• To be used as investment for future economic growth
• To be created for direct consumption by individuals
• To serve as resources for the production of other goods
• To be exported to other countries to improve net exports

Which of the following is associated with Capital Goods?

• Goods intended for immediate personal satisfaction
• The final dollar value of all services produced in a year
• Investment leading to economic growth
• The interest rate applied to consumer credit cards

Select the correct list of the Four Factors of Production.

• Rent, Wages, Interest, and Profit
• Consumption, Investment, Government Spending, and Net Exports
• Land, labor, capital, and entrepreneurship
• Individuals, businesses, governments, and foreign trade

What are Factor Payments?

• Payments for the Four Factors of Production, specifically Rent, Wages, Interest, and Profit
• Direct financial support from the government such as Welfare or Social Security
• Payments made by businesses to the government in the form of taxes
• The total value added at each stage of the production process