AP Macroeconomics

Unit One Review

Scarcity, Opp. Cost, Markets and International Trade
Coach Knox
1. Define what Economics is.
2. Why are we forced to make decisions?
3. Explain decision making at the margin.
4. What is the difference between macroeconomics and microeconomics?
5. Explain what economic efficiency entails.
6. What is scarcity and why does it exist?
7. What are the four categories of economic resources?
8. Explain why money is not considered real capital.
9. Compare productive efficiency and allocative efficiency.
10. Draw a PPC and explain what economic concepts are illustrated.
11. Become familiar with #4 in Chapter 6 of McConnell and Brue.
12. Write down both formulas for figuring the opportunity cost if given the output or the input.
13. Explain what the term, ceteris paribus refers to.
14. What are the two major types of economic systems that exist in todays society?
15. What are the benefits of specialization and trade?
16. How does a nation determine the terms of trade?
17. Explain the benefits of utilizing the foreign exchange market.
18. What is the difference between the depreciation and appreciation of a currency in the foreign
exchange market?
19. What are trade barriers and why do nations sometimes use barriers to trade?
20. What do PENTIPO and TSTORE represent?
21. What is the definition of a market?
22. Draw a Demand schedule and a Supply schedule and have them both using the same prices.
23. Illustrate and explain the difference between a change in the quantity demanded and a
change in demand.
24. Write out three scenarios for both, Supply and Demand, which illustrate a shift or a change in
supply and demand (be sure to show at least one example of a decrease).
25. Explain why the demand curve is downward sloping in a micro-market.
26. Explain why in a competitive market price and quantity will always result in equilibrium.