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

Saving is a leakage because it withdraws income from the circular flow rather than returning it as spending.

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

The production possibilities frontier (PPF) shows all combinations of two goods an economy can produce given its resources, illustrating opportunity cost trade-offs.

Question 3

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

Accepted Answer

Operating with some unemployed or underutilized resources

Answer

A point inside the PPF means the economy is not using all available resources efficiently, indicating unemployment or underutilization.

Question 4

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

Accepted Answer

All other variables are held constant

Answer

Ceteris paribus is a Latin phrase meaning 'all other things being equal,' used to isolate the effect of one variable.

Question 5

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

Accepted Answer

The national unemployment rate

Answer

The national unemployment rate is an aggregate measure of the entire economy, making it a macroeconomic variable.

AP Practice Test

AP Practice Test

AP Macro MACRO: Concepts and Models 2