How to Prepare for the AP Micro/Macro Economics Advance Placement Examinations

by Musgrave, Frank; Kacapyr, Elia; Barron's Educational Series, Inc.

• ISBN13: 9780764111648
• ISBN10: 0764111647
• Format: Paperback
• Copyright: 2001-04-01
• Publisher: Barrons Test Prep

Summary

This brand new test prep manual offers a full-length model examination with answers explained plus a wealth of material explaining and illustrating important concepts in micro and macro economics. Just a few among the major topics covered include perfect and imperfect competition, monopoly, costs, production, supply, the public sector, resource markets, and much more. In addition to the model exam, students will find sample questions and short tests both within chapters and at their conclusions.

Table of Contents

Introduction	1	(2)
Preparing for the Advanced Placement Exams in Microeconomics and Macroeconomics	3	(7)
The Exams	3	(1)
The Design of This Book	3	(1)
Multiple-Choice Questions	4	(3)
Free-Response Questions	7	(3)
The Discipline of Economics	10	(13)
Economics Defined	10	(1)
Resources	11	(1)
Opportunity Cost	12	(1)
Production Possibilities Frontier	13	(2)
Law of Increasing Costs	15	(1)
Comparative Advantage	16	(2)
Summary	18	(1)
Terms	19	(1)
Multiple-Choice Review Questions	20	(2)
Free-Response Review Questions	22	(1)
Economic Systems	23	(16)
The Fundamental Economic Questions	23	(1)
Strategies for Dealing with the Fundamental Economic Questions	24	(8)
The Circular Flow Diagram	32	(1)
Summary	33	(1)
Terms	33	(1)
Multiple-Choice Review Questions	34	(3)
Free-Response Review Questions	37	(2)
Microeconomics	39	(116)
Demand and Supply: The Basics	41	(12)
Introduction	41	(1)
Competitive Markets	41	(1)
Market Equilibrium---Demand and Supply	42	(7)
Summary	49	(1)
Terms	50	(1)
Multiple-Choice Review Questions	51	(1)
Free-Response Review Questions	52	(1)
Applications of Demand and Supply---Elasticity	53	(12)
Introduction	53	(2)
Limits and Degrees of Elasticity	55	(3)
Cross-Elasticity of Demand	58	(1)
Income Elasticity of Demand	59	(1)
Price Elasticity of Supply	60	(1)
Incidence of Tax on Suppliers and Consumers	60	(1)
Summary	61	(1)
Formulas	62	(1)
Multiple-Choice Review Questions	63	(1)
Free-Response Review Questions	64	(1)
Theory of Consumer Choice or Behavior	65	(7)
Introduction	65	(1)
The Basic Tenets of the Theory of Consumer Choice	65	(2)
Consumer Surplus	67	(2)
Income and Substitution Effects	69	(1)
Summary	69	(1)
Terms	69	(1)
Multiple-Choice Review Questions	70	(1)
Free-Response Review Questions	71	(1)
Government and Public Sector: Market Failure, Rents, Externalities, Public Goods, and Efficiency	72	(12)
Introduction	72	(1)
Important Concepts	73	(1)
Private Goods and Public Goods	74	(1)
Measures of Efficiency	74	(2)
Bases for Public Goods or Government Interference with Market Outcomes	76	(4)
Summary	80	(1)
Terms	80	(1)
Formulas	81	(1)
Multiple-Choice Review Questions	82	(1)
Free-Response Review Questions	83	(1)
Costs, Production, Supply	84	(13)
Introduction	84	(2)
Production	86	(1)
Costs	87	(6)
Summary	93	(1)
Terms	94	(1)
Formulas	94	(1)
Multiple-Choice Review Questions	95	(1)
Free-Response Review Questions	96	(1)
Product Markets: Types, Characteristics, Pricing Strategies	97	(7)
Introduction	97	(1)
Things to Know	97	(1)
Product Markets: Definitions	97	(4)
Summary	101	(1)
Terms	102	(1)
Multiple-Choice Review Questions	103	(1)
Perfect Competition	104	(12)
Things to Know	104	(2)
The Expanded Concepts	106	(4)
Evaluation of Perfect Competition	110	(1)
The Long Run	111	(1)
Summary	112	(1)
Terms	113	(1)
Formulas	113	(1)
Multiple-Choice Review Questions	114	(1)
Free-Response Review Questions	115	(1)
Monopoly	116	(11)
Introduction	116	(1)
Things to Know	116	(1)
The Nature of Monopoly and Its Types	117	(3)
Price Discrimination	120	(1)
Types of Monopolies and Their Potential Regulation	120	(2)
Terms	122	(1)
Formulas	123	(1)
Multiple-Choice Review Questions	124	(2)
Free-Response Review Questions	126	(1)
Imperfect Competition: Monopolistic Competition, Oligopoly	127	(12)
Introduction	127	(1)
Monopolistic Competition	128	(4)
Oligopoly: The Non-Collusive Kinked Demand Model	132	(4)
Terms	136	(1)
Formulas	136	(1)
Multiple-Choice Review Questions	137	(1)
Free-Response Review Questions	138	(1)
Resource Markets with Applications to Labor	139	(16)
Connections Between Product Markets and Resource Markets	139	(2)
Derived Demand: Wage Elasticity of Demand	141	(1)
The Demand for a Resource (Labor)	142	(4)
Shifts in Demand for a Resource (Labor)	146	(1)
Supply of Resources	147	(1)
Shifts in Supply	148	(1)
The Bases of Wage Differentials	149	(1)
Summary	150	(1)
Terms	150	(1)
Formulas	151	(1)
Multiple-Choice Review Questions	152	(3)
Model Advanced Placement Examination in Microeconomics	155	(28)
Macroeconomics	183	(100)
The National Income and Product Accounts	185	(11)
The Accounts	185	(1)
Gross Domestic Product	185	(1)
The Expenditures Approach	186	(1)
The Income Approach	187	(1)
Adjusting for Price Changes	188	(1)
The Underground Economy	189	(1)
Other Things That Are Not Counted in GDP	190	(1)
Other Measures in the National Income and Product Accounts	190	(1)
Summary	191	(1)
Terms	192	(1)
Formulas	192	(1)
Multiple-Choice Review Questions	193	(2)
Free-Response Review Questions	195	(1)
Inflation and Unemployment	196	(11)
The Twin Evils	196	(1)
Inflation	196	(4)
Unemployment	200	(2)
Summary	202	(1)
Terms	202	(1)
Formulas	203	(1)
Multiple-Choice Review Questions	204	(2)
Free-Response Review Questions	206	(1)
Aggregate Supply and Aggregate Demand	207	(18)
Why the Economy Moves in Cycles	207	(1)
Classical Economic Theory	207	(1)
Keynesian Theory	208	(8)
Using the AS/AD Model	216	(3)
Summary	219	(1)
Terms	219	(1)
Formulas	220	(1)
Multiple-Choice Review Questions	221	(3)
Free-Response Review Questions	224	(1)
Fiscal Policy	225	(15)
Keynes' Remedy for the Great Depression	225	(1)
Fiscal Policy	226	(8)
Summary	234	(1)
Terms	235	(1)
Formulas	235	(1)
Multiple-Choice Review Questions	236	(3)
Free-Response Review Questions	239	(1)
Money and Banking	240	(11)
The Supply of Money	240	(1)
Fiat Money	241	(1)
The Federal Reserve System	242	(4)
Summary	246	(1)
Terms	247	(1)
Formulas	247	(1)
Multiple-Choice Review Questions	248	(2)
Free-Response Review Questions	250	(1)
Monetary Policy	251	(10)
Definition	251	(1)
Changes in the Money Supply	251	(4)
Summary	255	(1)
Terms	255	(1)
Formulas	256	(1)
Multiple-Choice Review Questions	257	(3)
Free-Response Review Questions	260	(1)
Economic Growth	261	(8)
Living Standards	261	(1)
The Determinants of Economic Growth	261	(3)
Summary	264	(1)
Terms	265	(1)
Formulas	265	(1)
Multiple-Choice Review Questions	266	(2)
Free-Response Review Questions	268	(1)
International Trade and Exchange	269	(14)
The Balance of Trade	269	(1)
Trade Restrictions	269	(3)
The Balance of Payments	272	(1)
Exchange Rates	273	(4)
Monetary and Fiscal Policy in an Open Economy	277	(1)
Summary	277	(1)
Terms	278	(1)
Formulas	279	(1)
Multiple-Choice Review Questions	280	(2)
Free-Response Review Questions	282	(1)
Model Advanced Placement Examination in Macroeconomics	283	(24)
Index	307