AP Macro MACRO: Concepts and Models 2

Question 1

In the circular flow model, which of the following represents a leakage from the spending stream?

Accepted Answer

Household saving

Answer

Consumer spending

Answer

Business investment

Answer

Government transfer payments

Question 2

Which model best illustrates the trade-off a society faces when deciding how much of each of two goods to produce?

Accepted Answer

Production possibilities frontier

Answer

Circular flow model

Answer

Aggregate demand-aggregate supply model

Answer

Money market model

Question 3

A point inside the production possibilities frontier indicates that an economy is:

Accepted Answer

Operating with some unemployed or underutilized resources

Answer

Operating at full employment

Answer

Using resources efficiently

Answer

Beyond its productive capacity

Question 4

In macroeconomic models, the term 'ceteris paribus' means:

Accepted Answer

All other variables are held constant

Answer

All variables change simultaneously

Answer

Only the price level changes

Answer

The economy is in long-run equilibrium

Question 5

Which of the following is the BEST example of a macroeconomic variable?

Accepted Answer

The national unemployment rate

Answer

The price of a Toyota Camry

Answer

Apple's quarterly revenue

Answer

The wage paid to a specific nurse

Question 6

The concept of opportunity cost in macroeconomics suggests that:

Accepted Answer

The real cost of a choice is the next best alternative forgone

Answer

All resources are free if the government provides them

Answer

Opportunity costs only apply to consumer decisions

Answer

Governments face no opportunity costs when spending

Question 7

If an economy is producing at a point on its PPF, any increase in production of one good necessarily requires:

Accepted Answer

A decrease in production of the other good

Answer

An increase in total resources

Answer

An improvement in technology

Answer

An increase in foreign trade