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AP Macroeconomics Term 3 CTA Fall 2020

Total questions: 85

Worksheet time: 56mins

Name
Class
Date
1.

1. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.

a)

direct, inverse

b)

inverse, direct

c)

inverse, inverse

d)

direct, direct

e)

strong, weak

2.

Which of the following will NOT cause the demand for model airplanes games to change?

a)

a change in the price of a close substitute

b)

a change in consumer incomes

c)

a change in the price of model airplanes

d)

a change in consumer tastes

e)

a change in consumer preferences

3.
Oil is this type of scarce resource.
a)
Human Capital
b)
Land/Natural 
c)
Labor
d)
Physical Capital
4.
Workers agree to a 10% wage increase.  Everything else remaining constant, this will cause the _______ curve to shift _____. 
a)
demand; right
b)
demand; left
c)
supply; right
d)
supply; left
5.
There is an increase in supply.  This will cause the equilibrium price to ______ & the equilibrium quantity to ______.
a)
decrease; increase
b)
decrease; decrease
c)
increase; increase
d)
increase; decrease
6.
Columbia and Mexico both produce wine and cars under conditions of constant opportunity costs. Columbia will have a comparative advantage in car production if:
a)
it can produce more cars than Mexico.
b)
the opportunity cost of car production is lower in Columbia than in Mexico.
c)
its labor productivity in car production is greater than Mexico's.
d)
it can produce more wine than Mexico.
7.
If the supply and demand curves intersect at a price of $20 then any price above that would result in a(n):
a)
shortage.
b)
equilibrium.
c)
increase in demand.
d)
surplus.
8.
What can cause a production possibilities frontier to shift away from the origin?
a)
Thousands of people move out of the country.
b)
A new technology used in production.
c)
An epidemic kills thousands .
d)
The population is growing increasingly old.
9.
A country’s production possibilities increase because the available workers become more skilled at their jobs. This is an example of growth caused by
a)
Land
b)
Labor
c)
Capital
d)
Entrepreneurship
10.
Both nations will gain from trade when 1 tire trades for:
a)
1/3 radio.
b)
1/2 radio.
c)
1 1/2 radios
d)
2 radios
11.
A decrease in the price of eggs will result in a(n):
a)
increase in the demand for eggs.
b)
increase in the supply of eggs.
c)
decrease in the supply of eggs.
d)
downward movement along the supply curve of eggs.
12.
A decrease in the price of eggs will result in a(n):
a)
increase in the demand for eggs.
b)
increase in the supply of eggs.
c)
decrease in the supply of eggs.
d)
downward movement along the supply curve of eggs.
13.
The production of more goods, the development of new technology, and the development of a higher standard of living are associated with what economic goal
a)
Economic Equity
b)
Economic Efficiency
c)
Full Employment
d)
Economic Growth
14.
When we look at the aggregate of the economy the analysis at the level would be called
a)
microeconomics
b)
positive economics
c)
macroeconomics
d)
normative economics
15.
Which of the following is a normative economic statement
a)
the CPI rose 5.6% last month
b)
the unemployment rate of 6.8% is too high
c)
the average loan IR is 8.6%
d)
the economy grew at an average rate of 2.6%
16.
The most fundamental economic problem is 
a)
Scarcity
b)
Taxation
c)
Unemployment
d)
Freedom
17.
If a country has  a comparative advantage over another country it is said that
a)
Country A can produce more than Country B
b)
Country A should not trade with Country B
c)
Country A can produce at a lower opportunity cost than Country B
d)
Country A and Country B have no direct relationship to each other
18.
What is Macroeconomics the study of?
a)
study of total effects on the national economy and the global economy of the choices that individuals, businesses, and gov’ts make
b)
study of the choices individuals/businesses make and the way these choices interact and are influenced by governments
c)
study of marginal benefit and marginal cost
d)
study of scarcity
19.
Which of the following is the best definition of opportunity costs?
a)
the amount of one good that must be given up in order to produce one more unit of another good
b)
the amount of an input that must be used in order to produce one more unit of a good
c)
the price of a good that must be charged in order for a merchant to sell one more unit
d)
none of the above
20.
Scarcity is central to the study of economics because it implies that
a)
markets cannot properly allocate resources.
b)
wants can not be fulfilled and thus all goods must be rationed.
c)
every choice involves an opportunity cost.
d)
wants are unlimited.
21.
Human Capital is best defined as
a)
motivation and equipment workers have access to
b)
technology and infrastructure humans build
c)
the knowledge and skill that make a worker productive
d)
  a factory
22.
According to the laws of supply and demand, a decrease in demand will cause prices to:
a)
Increase
b)
Decrease
c)
Stay The Same
d)
Equalize
23.
In the resource market, a)_________ are sellers and b)________ are buyers.
a)
a) Firms, b) Households
b)
a) Consumers, b) Owners
c)
a) Households, b) Firms
d)
a) Owners, b) Consumers
24.
Consumers' willingness to replace a costly item with a less costly item is an example of
a)
the substitution effect
b)
the income effect
c)
demand elasticity
d)
law of diminishing marginal utility
25.
An increase in the price of milk causes a decrease in the demand for cereal. The two products are
a)
substitutes
b)
complements
c)
unrelated
d)
demand elastic
26.
According to this demand curve, if the price of movie videos increases from $14 to $16, the quantity demanded will
a)
fall from 600 to 400
b)
rise from  400 to 600
c)
fall from 400 to 200
d)
rise from 200 to 400
27.
Which of the following choices could cause the movement shown in the graph?
a)
a decrease in income
b)
an increase in the number of consumers
c)
a decrease in the price of a substitute
d)
an increase in the price of a complement
28.
When producers offer fewer products for sale at each and every price,
a)
the supply curve has shifted to the right
b)
the supply curve has shifted to the left
c)
the price per unit decreases
d)
they expect subsidies
29.

The expenditure by all levels of government on goods and services

a)

Imports of goods and services

b)

Investment

c)

Consumer expenditure

d)

Government expenditure on goods and services

30.

The expenditure by households on consumption goods and services.

a)

Business Cycle

b)

Exports of goods and services

c)

Consumption expenditure

d)

Government expenditure on goods and services

31.

The market value of all the final goods and services produced within a country in a given time period.

a)

Gross Domestic Product

b)

Net exports of goods and services

c)

Nominal GDP

d)

Real GDP

32.

The purchase of new capital goods (tools, instruments, machines, buildings) and additions to inventories

a)

Exports of goods and services

b)

Real GDP

c)

Investment

d)

Net exports of goods and services

33.

The value of the final goods and services produced in a given year expressed in terms of the prices in a reference base year.

a)

Real GDP

b)

Gross Domestic Product

c)

Business Cycle

d)

Nominal GDP

34.

The value of the final goods and services produced in a given year expressed in terms of the prices of the same year.

a)

Real GDP

b)

Nominal GDP

c)

Net exports of goods and services

d)

Gross Domestic Product

35.

Items that firms in the United States produce and sell to the rest of the world

a)

Imports of goods and services

b)

Investment

c)

Nominal GDP

d)

Exports of goods and services

36.

The value of exports of goods and services minus the value of imports of goods and services.

a)

Gross Domestic Product

b)

Net exports of goods and services

c)

Investment

d)

Nominal GDP

37.
Expectant parents buy supplies for the nursery.  Would this be included in GDP? 
a)
Yes - Consumer Spending
b)
Yes - Investment 
c)
No - Intermediate goods
d)
No - Non-market activity
38.
Which of the following purchases is included in the calculation of gross domestic product?
a)
A used economics textbook from the bookstore
b)
1,000 shares of stock in a computer firm
c)
A car produced in a foreign country
d)
New harvesting equipment for the farm
39.
Which of the following would be counted as investment when calculating gross domestic product?
a)
The purchase of a used computer by an auto manufacturer
b)
The purchase of a share of IBM stock by an employee
c)
The construction of a new house
d)
The construction of roads by the government
40.
Which of the following would be an example of an intermediate good or service?
a)
A calculator purchased by a college student for taking exams
b)
Gasoline purchased by an insurance agent to visit clients at their homes
c)
A car purchased by a student’s parents and given to the student
d)
Tuition paid by a student at a state university
41.
Of the following, which is the best example of structural unemployment?
a)
A computer programmer who quits her job to move to a warmer climate
b)
A construction worker who loses his job in the winter
c)
An auto worker who loses her job during a recession
d)
A steel worker who is replaced by a robot
42.
Which of the following is true about the natural rate of unemployment?
a)
It can vary over time.
b)
It is 2 percent orless of the civilian laborforce.
c)
It is equal to the structural unemployment rate.
d)
 It allows for some frictional and cyclical unemployment.
43.
When the actual inflation rate is greater than the anticipated inflation rate, which of the following is most likely to suffer?
a)
Those who lend at a fixed interest rate
b)
Those who borrow at a fixed interest rate
c)
Retired persons with cost-of-living adjustment in their benefits
d)
Employers who hire workers with longterm labor contracts
44.

Which of the following would NOT be considered part of the labor force?

a)

Kanye West, a banker who feels he is overqualified for his job.

b)

Colin Kaepernick, who is an unemployed football player, but has attended three job interviews in the last month.

c)

Kane Brown, who has a part-time job but wants a full-time job.

d)

Harry Potter, a stay-at-home dad.

45.
If you live on a fixed income, how will you be affected by inflation.
a)
You are hurt because your purchasing power has decreased.
b)
You are helped because your purchasing power has increased.
c)
You are helped because interest rates rise.
d)
You are hurt because interest rates rise.
46.
During a recession, which of the following is likely to occur?
a)
an increase in real wages
b)
an increase in production
c)
and increase in the GDP growth rate
d)
an increase in the unemployment rate
47.

What is the size of the Labor Force?

Unemployed (Looking for job) = 200

Retired = 5

Prison = 2

School (full time, not looking for job) = 10

Employed = 180

Unemployed (not looking for job) = 20

a)

180

b)

200

c)

220

d)

237

48.
The unemployment rate is calculated as the number of
a)
unemployed persons divided by number of employed persons
b)
persons in the labor force divided by the number of unemployed
c)
unemployed divided by size of the labor force
d)
employed persons divided by number of unemployed persons
49.
A general rise in overall prices is called:
a)
Deflation
b)
Inflation
c)
Consumer Price Index
d)
Federal Reserve
50.
What occurred between June and July of 2016?
a)
Inflation
b)
Hyperinflation
c)
Deflation
d)
Cost-push Inflation
51.

A Chik-fil-A milkshake today costs $2.75. The Biloxi location sold 5,000,000 this year. In 1961, it cost $0.80 and they sold 2,000,000. How do I find the nominal GDP for Chik-fil-A milkshakes in 1961?

a)

2.75 x 5,000,000

b)

.80 x 2,000,000

c)

.80 x 5,000,000

d)

2.75 x 2,000,000

52.

Mrs. Roessling is quitting her job as a teacher and moving to Florida. She is

a)

Cyclically unemployed

b)

Seasonally Unemployed

c)

Structurally Unemployed

d)

Frictionally Unemployed

53.
The unemployment rate does not account for which two types of people?
a)
discouraged workers (hidden unemployed) and those employed
b)
full time carers and those in school
c)
retirees and those in prison
d)
discouraged workers (hidden unemployed)  and underemployed
54.
Who is most likely to be hurt by inflation?
a)
someone who borrowed money
b)
a retiree on a fixed income
c)
a business owner
d)
the U.S. government
55.
Which of the following would not affect the size of real GDP?
a)
Consumer purchase of a new car for personal use.
b)
Government purchase of a new car for the military
c)
Consumer purchase of a rare renaissance painting. 
d)
Business purchase of a new car for a delivery vehicle.
56.
Which of the following people would be considered structurally unemployed? 
a)
Unemployed auto assembly line factory worker during a recession.
b)
A high school student who mows lawns during the summer, but is out of work because it is winter
c)
An auto assembly line worker who quit her job to go back to school full-time to improve her job skills
d)
Unemployed auto assembly line factory worker who was replaced with a robot
57.
Which of the following will most likely occur during the expansionary phase of the business cycle? 
a)
Real GDP rises and unemployment falls.
b)
Real GDP rises and unemployment rises. 
c)
Real GDP declines and inflation rises.
d)
Interest rates rise and the number of business failures rise. 
58.

If the consumer price index (CPI) were 131 at year-end 1999 and 125 at year-end 1998, then inflation during 1999 was

a)

zero; prices were stable during 1999

b)

4.8 percent

c)

6.0 percent

d)

8.4 percent

59.
Frictional unemployment 
a)
would be eliminated if the economy were operating at full employment levels of GDP.
b)
is zero when we have achieved the Natural rate of unemployment.
c)
is present even when labor markets are working well.
d)
is the result of worker skills not matching the jobs available
60.
Which result occurs when federal government expenditures are greater than the federal government's total receipts?
a)
reduced net exports
b)
increased excise taxes
c)
a federal budget surplus
d)
a federal budget deficit
61.
You read in the newspaper that the CPI in 2008 was 120, you will conclude that a typical market basket in 2008 would have cost
a)
120 percent more than the same market basket purchased in 2007.
b)
20 percent more than the same market basket purchased in the base year.
c)
20 percent less than the same market basket purchased in the base year.
d)
20 percent more than the same market basket purchased in 2007.
62.
If investment decreases by $20 billion and the economy's MPC is .5, the aggregate demand curve will shift
a)
leftward by $40 billion at each price level.
b)
rightward by $20 billion at each price level.
c)
rightward by $40 billion at each price level.
d)
leftward by $20 billion at each price level.
63.
In an effort to avoid recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to: 
a)
affect neither aggregate supply nor aggregate demand.
b)
increase aggregate demand.
c)
reduce aggregate demand.
d)
reduce aggregate supply.
64.
The foreign purchases effect suggests that a decrease in Canada's price level relative to other countries will: 
a)
shift the aggregate demand curve leftward.
b)
shift the aggregate supply curve leftward.
c)
decrease Canada's exports and increase Canada's imports.
d)
increase Canada's exports and decrease Canada's imports.
65.
The wealth effect states that higher prices ______ the purchasing power or the real value of the nation's households' wealth and savings.
a)
increase
b)
stagnate
c)
reduce
d)
double
66.
The MPC is .75.  Congress increase government spending by $100 billion and increases taxes by $100 billion.  The GDP
a)
increases by $800 billion
b)
decreases by $800 billion
c)
remains the same
d)
increases by $100 billion
67.

If the economy starts at B and there is a fall in aggregate demand, the economy moves

a)

back to A in the long run.

b)

to B in the long run.

c)

to C in the long run.

d)

to D in the long run.

e)

to either A or C in the long run.

68.

In the short run, a decrease in investment is shown in which graph:

a)
b)
c)
d)
69.

If the government increases taxes by more than is needed to close an inflationary gap. Which of the following would most likely be the end result?

a)

Equilibrium real GDP will be more than anticipated.

b)

The economy could move into a recession.

c)

The economy will generate a larger inflationary gap than anticipated.

d)

This will not have any adverse effects on the economy, since inflation has been abated.

e)

The unemployment rate will continue to decline.

70.

If the aggregate price level increases, the purchasing power falls, causing a decrease in consumer spending. This is known as the _____ effect and is a reason why the _____ curve slopes _____.

a)

interest rate; aggregate demand; downward

b)

wealth; aggregate demand; downward

c)

interest rate; investment demand; downward

d)

wealth; short-run aggregate supply; upward

e)

substitution; aggregate demand; downward

71.

Which of the following does NOT shift the AD curve?

a)

Government Spending

b)

Investment Spending

c)

Long run aggregate supply

d)

Net Exports

72.
A decline in investment will shift the AD curve to the: 
a)
left by a multiple of the change in investment.
b)
left by the same amount as the change in investment.
c)
right by the same amount as the change in investment.
d)
right by a multiple of the change in investment.
73.

The foreign purchases effect suggests that an increase in the U.S. price level relative to other countries will:

a)

increase the amount of U.S. real output purchased.

b)

increase U.S. imports and decrease U.S. exports.

c)

increase both U.S. imports and U.S. exports.

d)

decrease both U.S. imports and U.S. exports.

74.

If investment increases by $10 billion and the economy's MPC is .8, the aggregate demand curve will shift:

a)

leftward by $40 billion at each price level.

b)

rightward by $10 billion at each price level

c)

rightward by $50 billion at each price level.

d)

leftward by $20 billion at each price level.

75.

Which of the above diagrams best portrays the effects of declines in the prices of imported resources?

a)

A

b)

B

c)

C

d)

D

76.

If the MPS in an economy is .4, government could shift the aggregate demand curve leftward by $50 billion by:

a)

reducing government expenditures by $125 billion.

b)

reducing government expenditures by $20 billion.

c)

increasing taxes by $50 billion.

d)

increasing taxes by $250 billion.

77.

What is the formula of unemployment rate???

a)

=(labor force/unemployed)*100%

b)

=(GDP*labor force)/100%

c)

=(unemployed/labor force)*100%

d)

none of them

78.

What is the natural rate of unemployment (NRU)?

a)

is defined as the percentage of unemployed workers in the total labor force

b)

is defined an economy if there were no cyclical unemployment. In other words, it's frictional unemployment plus structural unemployment.

c)

refers to an overall increase in the Consumer Price Index (CPI),

d)

none of them

79.

A labor force of 20 million people has 18.5 million people employed. Find the unemployment rate.

a)

10%

b)

8.5%

c)

7.5%

d)

6%

80.

The unemployment rate will drop if

a)

A person is hired into a new job

b)

Someone who was previously laid off is rehired

c)

An unemployed person stops looking

d)

ALL of these answers are CORRECT

81.
a)

A

b)

B

c)

C

d)

D

e)

E

82.
a)

3.3%

b)

4.0%

c)

6.0%

d)

6.38%

e)

7.5%

83.
a)

A

b)

B

c)

C

d)

D

e)

E

84.
a)

A

b)

B

c)

C

d)

D

e)

E

85.
a)

A

b)

B

c)

C

d)

D

e)

E

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