Unit 1 Study Guide
AP Macroeconomics
Due February 3rd, 2015
Chapter 1: Limits, Alternatives, and Choices
Chapter 2: Market System and the Circular Flow
Chapter 3: Demand, Supply, and Market Equilibriums
Chapter 23: An Introduction to Macroeconomics
Comparative Advantage: p. 754-779
Terms to know:
1. Economics
2. Economic
prospective
3. Opportunity cost
4. Utility
5. Marginal analysis
6. Scientific method
7. Economics principle
8. Ceteris paribus
9. Macroeconomics
10. Aggregate
11. Positive economics
12. Normative
economics
13. Factors of production
14. Consumer goods
15. Capital goods
16. Production
possibilities curve
17. Law of increasing
opportunity costs
18. Economic growth
19. Economic system
20. Command system
21. Market system
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
Specialization
Division of labor
Medium of exchange
“Invisible Hand”
Circular flow model
Demand
Law of demand
Income effect
Substitution effect
Demand curve
Determinants of
demand
Normal goods
Inferior goods
Substitute good
Complementary
good
Change in demand
Change in quantity
demanded
Supply
Law of supply
Determinants of
supply
Change in supply
43. Change in quantity
supplied
44. Equilibrium price
45. Surplus
46. Shortage
47. Productive efficiency
48. Allocative efficiency
49. Price floor
50. Price ceiling
51. Opportunity costratio
52. Comparative
advantage
53. Business cycle
54. Recession
55. Real/Nominal GDP
56. Inflation
57. Investing
58. Financial investment
59. Economic investment
60. Expectations
61. Shocks
62. Inventory
63. Sticky prices
64. Flexible prices
Concepts/abilities:
1. Graph production possibilities curve
2. Explain inefficient, efficient, and unattainable on the PPC
3. Graph/label a supply curve and demand curve as well as label equilibrium
4. Know the determinants of supply and demand
5. Know all parts of the Circular Flow Model
6. Calculate comparative advantage (with table or graph)