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Unit 1

1.7 Multiple Choice Questions

4 min read•december 3, 2021

AP Macroeconomics 💶

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Multiple Choice Practice for Basic Economic Concepts

Welcome to Unit 1 AP Macroeconomics Multiple Choice Questions! Grab some paper and a pencil 📄 to record your answers as you go. You can see how you did on the Unit 1 Practice Questions Answers and Review sheet once you're done. Don't worry, we have tons of resources available if you get stumped 😕 on a question. And if solo study is not your thing, join a group in Hours!

Not ready to take a quiz yet? Take a look at the Intro to Unit 1

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Facts about the test: The AP Macroeconomics exam has 70 multiple choice questions and you will be given 1 hour to complete the section. That means it should take you around 8 minutes to complete 10 questions.

*The following questions were not written by College Board and, although they cover information outlined in the AP Macroeconomics Course and Exam Description, the formatting on the exam may be different.

1. Which is true for every economy, no matter its economic system?

A. Every economy decides how to distribute equal income to all citizens.

B. Every economy decides how to maximize trade with foreign allies.

C. Every economy decides what to produce and how to produce them.

D. Every economy must decide how to maximize the production of consumer goods and decrease the production of capital goods.

2. Which of the following is an example of human capital?

A. investment money

B. job training

C. factory

D. tools and machinery

3. If the production possibilities curve (PPC) is bowed out, it exhibits:

A. increasing opportunity costs

B. decreasing opportunity costs

C. no opportunity costs

D. constant opportunity costs

4. If you decide to go to the movies instead of studying for an upcoming test, the time you would have spent studying is known as your

A. time value of money

B. opportunity cost

C. constant cost scenario

D. differential possibilities outcome

5. A point on the PPC represents

A. an impossible outcome, give current resources

B. an inefficient use of resources

C. a constant opportunity cost

D. an efficient use of resources

6. If two countries were to specialize and trade, the same producer can have the comparative advantage in producing both goods.

A. True

B. False

C. Sometimes

D. Always

7. If the technology used to produce tacos improves at the same time as tacos become a more popular food choice for consumers, which of the following will definitely occur?

A. equilibrium quantity will remain the same

B. equilibrium price will increase

C. equilibrium quantity will decrease

D. equilibrium quantity will increase

8. You produce bananas and mangoes. If producing an extra banana required you to always give up the same amount of mangoes, your PPC would be

A. a straight line

B. bowed outward

C. bowed inward

D. infinite

9. If the price for a good is greater than the equilibrium price in that market, there is a(n)

A. shortage

B. surplus

C. trade deficit

D. alleviated demand

10. A leftward shift of the supply curve for coffee beans could be due to which of the following?

A. consumers' preference for tea over coffee

B. an increase in the price of tea and hot cocoa

C. a drought in a key production area of coffee beans

D. a decrease in the price of coffee

11. All of the following are factors of production EXCEPT:

A. bonds

B. physical capital

C. entrepreneurship

D. land

12. What is the most fundamental issue that is addressed in economics?

A. money and inequality

B. the stock market and its fluctuations

C. government intervention in private markets

D. the use of scarce resources

13. Bella and Urvi produce balloons. Bella can produce two balloons per hour, and Urvi can produce 12 balloons per hour. Who has the absolute advantage in producing balloons?

A. Urvi

B. Bella

C. Both

D. Neither

14. If two countries produce and specialize according to their comparative advantages, and then decide to engage in trade, which of the following must be true?

A. One nation would gain from trade.

B. One nation would lose from trade.

C. Both nations could consume outside of their individual PPCs.

D. Both nations would lose from trade.

15. Scarcity is when

A. available resources exceed wants

B. wants exceed available resources

C. wants are limited to essential goods

D. resources are used efficiently