AP Macroeconomics Chapters 10 and 11- Simple Review Questions
1. Briefly explain what the consumer price index (CPI) measures and how it is constructed.
2. What are some of the reasons that CPI is an imperfect measure?
3. What’s the difference between the CPI and the GDP Deflator?
4. What are the four components of GDP?
5. What is the difference between Real GDP and Nominal GDP, which is a better measure of economic
well-being and why?
6. What is inflation rate, what does it measure, and how is it measured?
7. What are 3 problems with measuring the cost of living through the CPI?
8. What is indexation and how does it account for changes in inflation?
9. What is the difference between real interest rates and nominal interest rates and how are they connected
to inflation rates?
10. Why are interest rates, GDP, and CPI important to our study of economic policy?
AP Macroeconomics Chapter 12- Simple Review Questions
1. What is meant by economic growth?
2. What are the four determinants of a country’s productivity and what do they mean?
3. In what ways do saving and investment affect economic and public policies in a country?
4. In what ways do diminishing returns and the catch-up effect affect economic and public policies in a
country?
5. In what ways does investment from abroad affect public and economic policies in a country?
6. In what ways does education affect public and economic policies in a country?
7. In what ways do health and nutrition affect public and economic policies in a country?
8. In what ways do property rights and political stability affect public and economic policies in a country?
9. In what ways does free trade affect public policies and economic policies in a country?
10. In what ways does research and development affect public and economic policies in a country?
11. What are the factors that are impacted by population growth?
Page 1 of 2
12. What does the level of a nation’s GDP measure? What does the growth rate of GDP measure? Would
you rather live in a nation with a high level of GDP and a low growth rate or in a nation with a low level
of GDP and a high growth rate?
13. List and describe four determinants of productivity.
14. In what way is a college degree a form of capital?
15. Explain how higher saving leads to a higher standard of living. What might deter a policymaker from
trying to raise the rate of saving?
16. Does a higher rate of saving lead to higher growth temporarily or indefinitely?
17. Why would removing a trade restriction, such as a tariff, lead to more rapid economic growth?
18. How does the rate of population growth influence the level of GDP per person?
19. Describe two ways the U.S. government tries to encourage advances in technological knowledge.
Page 2 of 2