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WorksheetsAP MACRO UNIT 1 Review
Total questions: 33
Worksheet time: 35mins
In a mixed economy, the three basic economic questions are answered by whom?
A central planning agency
A private planning agency
An international planning agency
markets and the government
large corporations and small businesses
If one-fourth of a nation’s wheat crop is destroyed by a flood in a given season, then the price of wheat and the quantity sold will change in which of the following ways?
Price- decrease, quantity no change
Price- decrease, quantity- increase
Price- increase, quantity- decrease
Price- increase, quantity- increase
Price- no change, quantity- increase
Which of the following likely results in a permanent increase (outward shift) in a nation’s productive capacity (rightward shift of the PPF)?
a. a decline in the birth rate
b. decline in adult literacy rates
c. widespread relocation of manufacturing firms to low-wage nations
d. national investment in capital resources like computers
e. a global increase in the price of oil
Nation X can produce 3 units of paper or 9 units of crepes. Nation Y can produce 5 units of paper or 5 units of crepes. Which of the following is true?
a. Nation X has comparative advantage in paper production and should trade paper to Nation Y in exchange for crepes
b. Nation X has comparative advantage in crepe production and should trade crepes to Nation Y in exchange for paper
Nation X has absolute advantage in paper production and Nation Y has absolute advantage in crepe production. No trade is possible.
d. Nation Y has absolute advantage in paper production and Nation X has absolute advantage in crepe production. No trade is possible.
e. Nation Y has comparative advantage in crepe production and should trade paper Nation X in exchange for crepes.
A change in which of the following can affect the growth (PPF) of a country?
I. The quantity and quality of a country’s labor force (workers)
II. Technology
III. Spending on capital goods/resources
I only
III Only
I and II only
II and III only
I, II, and III
Economics is most accurately described as the study of
money
how to make choices give our resources
financial institutions
how to promote scarcity
how firms maximize profits
The value of the best alternative forgone when a decision is made defines
economic goods
opportunity cost
scarcity
trade-off
comparative advantage
If the country is currently producing at Point D, it can produce more CAPITAL goods by doing which of the following?
Moving to point A
Moving to point C
Moving to point I
Moving to Point E
Which of the following statements about the production possibilities curve is true?
(A) Point A is not attainable in a developed society.
(B) Point D is not attainable given the society’s resources.
(C) The relative position of Points C and D reflect production alternatives or choices
(D) Elimination of unemployment will move the production possibilities curve to the right, closer to Point G.
(E) Point G lies outside the production possibilities curve because it represents a combination of resources that is not possible
The opportunity cost of moving from Pt E to Pt D is
200 Capital Goods
20 Consumer Goods
400 Capital Goods
10 Consumer Goods
50 Consumer Goods
If demand for a good or service decreases, the equilibrium price and quantity are most likely to change in which of the following ways?
Price- increase, Quantity- increase
Price- increase, Quantity- decrease
Price- decrease, Quantity- decrease
Price- decrease, Quantity- increase
Price- no change, Quantity- no change
An increase in the price of peanut butter will cause the demand curve for jelly to shift in which of the following directions?
(A) To the right, because peanut butter is a product that the government says is good for you
(B) To the right, if jelly is purchased by people with lower incomes and peanut butter is a luxury good for them
(C) To the right, if peanut butter and jelly are complementary goods
(D) To the left, if peanut butter and jelly are complementary goods
(E) To the left, if peanut butter and jelly are substitute goods
The government of a country responds to outside influences by setting the price of a given good above current equilibrium, what will occur as a result of this price floor?
(A) a surplus will occur and prices will drop to eliminate the disequilibrium
(B) a surplus will occur and prices will rise to eliminate the disequilibrium
(C) a shortage will occur and prices will drop to eliminate the disequilibrium
(D) a shortage will occur and prices will rise to eliminate the disequilibrium
(E) price equilibrium will remain constant
Which is true of an economy that operates entirely through central planning (command principles)?
a. Individual economic performance is reduced by the absence of the profit motive
There is relative ease in matching resource allocation to consumer demand
Producers receive market information through the price mechanism
The system adapts easily to technological change
The following information explains the units of output a worker can produce per month in Country A or Country B.
Use this information to answer questions 17-19
Country A can produce either 2 tons of cocoa or 4 cars. Country B can produce either 5 tons of cocoa or 15 cars.
Based on this information, which of the following is true?
(A) Country A has an absolute advantage in production of cocoa, while Country B has a comparative advantage in the production of cocoa.
(B) Country A has a comparative advantage in the production of cocoa, while Country B has comparative advantage in the production of cars.
(C) Country A has an absolute advantage in the production of cocoa, while Country B has a comparative advantage in the production of cars.
(D) Country A has a comparative disadvantage in the production of both goods.
(E) Neither country has a comparative advantage in the production of either good.
What is the opportunity cost for Country A in producing cars?
Country A can produce either 2 tons of cocoa or 4 cars. Country B can produce either 5 tons of cocoa or 15 cars.
a. 2 tons of cocoa
b. 4 tons of cocoa
c. No cost to Country A
d. ½ ton of cocoa
e. 5 tons of cocoa
Country B should?
Country A can produce either 2 tons of cocoa or 4 cars. Country B can produce either 5 tons of cocoa or 15 cars.
a. Specialize in car production, export cars, and import cocoa
b. Specialize in cocoa production, export cocoa, and import cars
c. Produce both goods because there is no comparative advantage in production
d. Produce neither because it has a comparative advantage in the production of both goods
e. Find a new trading partner
Which of the following changes in supply and/or demand would definitely result in a decrease in both the equilibrium price and quantity?
a. Demand Decrease
b. Supply Increase
c. Demand Increase
d. Supply Decrease
e. Supply Decrease and Demand Increase
Consider the model of a PPF, When an economy producing two goods is operating efficiently and at full employment, increasing the production of one good will result in
a. an inward shift of the production possibilities frontier
b. an outward shift of the production possibilities frontier
c. an increase in the amount of resources available
d. an increase in the costs of both goods
e. decrease in the amount of the other good that can be produced
Which of the following will occur if a legal price ceiling is placed on a good below its free market equilibrium?
a. Surplus will develop
b. Shortages will develop
c. Underground markets will develop
d. The equilibrium price will ration the good
e. The quantity sold will increase
Which of the following events will cause the demand curve for hamburgers to shift to the right?
a. An increase in the price of pizza, a substitute for hamburgers
b. An increase in the price of French fries, a complement to hamburgers
c. An increase in the price of hamburgers
d. A decrease in the price of hot dogs
e. A decrease in the cost of producing hamburgers
The market system is an economic system that:
Produces more consumer goods than capital goods
Produces more capital goods than consumer goods
Gives private individuals and institutions the right to own resources used in production
Gives the government the right to tax individuals and corporations for the production of capital goods
Which of the following will cause an outward shift of the production possibilities frontier?
a. a grant for educational training for employees, improving the workforce talent
b. a decrease in a nation’s birthrate, thus decreasing the labor force
c. a natural disaster creating limitations of a vital natural resource
d. a shortage of skilled workers
e. an increase of unskilled workers
“Scarcity” is best defined as
a. material resources that are unlimited
b. an idea used by developed nations to satisfy unlimited wants and desires with limited natural resources
c. limited vital material resources compared with limited wants and needs
d. all points lying outside the production possibilities frontier
e. the idea that a society’s wants and needs are unlimited, and resources are limited
Mineral deposits, human capital, entrepreneurship, use of technology, and machinery are all examples of
a. factors of production
b. superior and inferior goods
c. elements sometimes needed to move an existing company overseas
d. public goods
e. material needs and wants
The diagram shows three production possibilities curves (PPCs). If the current PPC is P1, which of the following changes indicates a recession (increased inefficiency)?
(A) Movement from point X to point Y
(B) Movement from point Y to point X
(C) Movement from point Y to point Z
(D) Shift from PPC sub 1 to PPC sub zero
(E) Movement from point Z to point X
Which of the following is the most fundamental issue that economics addresses?
(A) Choice of appropriate technology
(B) Reduction of unemployment
(C) Reduction of budget deficit
(D) Promotion of privatization
(E) Use of scarce resources
All of the following are macroeconomic variables EXCEPT
(A) the price of skateboards sold in the US between 1995 and 2005
(B) the percentage change in income levels in Kenya between 1980 and 2000
(C) the gross exports of goods out of the United Kingdom in 2010
(D) the average price level of goods in the United States in 2011
(E) the unemployment rate in Germany after World War I
In the coffee market, what effect would a decrease in supply have on the market?
a. Price Increase Quantity Increase
b. Price Increase Quantity Decrease
c. Price Decrease Quantity Increase
d. Price No Change Quantity Increase
e. Price Decrease Quantity No change
If two nations specialize according to the law of comparative advantage and then trade with each other, which of the following would be true?
a. A smaller number of goods would be available in each trading nation
b. Total world production of goods would decrease
c. Everyone within each nation would be better off
d. Each nation would increase its production possibilities
e. One nation would gain at the expense of the other
The graph shows the demand for and supply of a good. If the market price is P, then
a. there is a shortage, and the price will rise
b. there is a shortage, and the price will fall
c. there is a surplus, and the price will rise
d. there is a surplus, and the price will fall
e. demand will decrease and supply will increase
Nations A and B produce only chairs and bicycles. If each laborer in Nation A can produce twice as many chairs as each laborer in Nation B, then which of the following is necessarily true?
a. Nation A has a comparative advantage in chairs
b. Nation A has a comparative advantage in bicycle
c. Nation A has an absolute advantage in chairs
d. Nation B has an absolute advantage in bicycles
e. Nation A should specialize in producing chairs
Who is the best superhero?
The Flash
The Flash
The Flash
The Flash
