Basic Economic Concepts AP Macroeconomics MR. GRAHAM Unit One Review Basic Economic Concepts

Which of the following is an example of a resource. I. Petroleum II Which of the following is an example of a resource? I. Petroleum II. A factory III. A cheeseburger dinner I only II only III only I and II only I, II and III

I only II only III only I and II only I, II and III Which of the following situations represent(s) resource scarcity? I. Rapidly growing economies experience increasing levels of water pollution. II. There is a finite amount of petroleum in the physical environment. III. Cassette tapes are no longer being produced. I only II only III only I and II only I, II and III

Suppose that you prefer reading a book you already own to watching TV and that you prefer watching TV to listening to music. If these are your only three choices, what is the opportunity cost of reading? watching TV and listening to music watching TV listening to music sleeping the price of the book

Which of the following statements is/are normative. I Which of the following statements is/are normative? I. The price of gasoline is rising. II. The price of gasoline is too high. III. Gas prices are expected to fall in the near future. I only II only III only I and II only I, II and III

Which of the following questions is studied in microeconomics? Should I go to college or get a job after I graduate? What government policies should be adopted to promote employment in the economy? How many people are employed in the economy this year? Has the overall level of prices in the economy increased or decreased this year? What determines the overall salary levels paid to workers in a given year?

During the recession phase of a business cycle, which of the following is likely to increase? The unemployment rate The price level Economic growth rates The labor force Wages

The labor force is made up of everyone who is employed. old enough to work. actively seeking work. employed or unemployed. employed or capable of working.

A sustained increase in aggregate output over several decades represents an expansion. a recovery. a recession. a depression. economic growth.

Which of the following is the most likely result of inflation? falling employment a dollar will buy more than it did before people are discouraged from holding cash price stability low aggregate output per capita

The other things equal assumption allows economists to avoid making assumptions about reality. focus on the effects of only one change at a time. oversimplify. allow nothing to change in their model. reflect all aspects of the real world in their model.

Which point(s) on the graph represent efficiency in production? A and G B, C, D, E, F A, B, C. D, E, F, G A, B, C, D, E, F, G and S A, B, C, D, E, F, G, S and R

For this economy, an increase in the quantity of digital cameras produced without a corresponding decrease in the quantity of pocket PCs produced cannot happen because there is always an opportunity cost. is represented by a movement from point S to point A. is represented by a movement from point F to point E. is represented by a movement from point S to point D. is only possible with an increase in resources or technology.

An increase in unemployment could be represented by a movement from point G to F B to A F to R D to S S to D

Which of the following might allow this economy to move from point D to point R? more workers discovery of new resources building new factories technological advances all of the above

Use the graph to determine which country has an absolute advantage in producing each good. Absolute advantage Absolute advantage in wheat production in textile production Country A Country B Country A Country A Country B Country A Country B Country B Country A Neither

For country A, the opportunity cost of a bushel of wheat is ½ units of textiles ⅔ units of textiles 1⅓ units of textiles 1½ units of textiles 2 units of textiles

Use the graph to determine which country has a comparative advantage in producing each good Comparative advantage Comparative advantage in wheat production in textile production Country A Country B Country A Country A Country B Country A Country B Country B Country A Neither

If the two countries specialize and trade, which of the choices below describes the countries’ imports? Import Wheat Import Textiles Country A Country A Country A Country B Country B Country B Country B Country A Neither Country B

What is the highest price Country B is willing to pay to buy wheat from Country A? ½ units of textiles ⅔ units of textiles 1 unit of textiles 1½ units of textiles 2 units of textiles