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‘AP Macroeconomics Page tof 3
Test: What Is Economics?
(pone
‘+ Neatly write your responses in the spaces provided. Use a blue or black pen. Don't write
in the margins,
Remember to complete the submission information on every page you turn i.
Free-Response Questions
1. Scarcity and Economic Systems
A. Define scarcity. (3 points)
When tescurte to tented and asuffiesert 40 sakishy All Maran
warts and reeds.
B. What are the three questions that every society must face because scarcity
exists? (3 points)
Whe goods ond senites to prajuce? How fo produce Hren? Who
receives He goeds ard sewices Hat ore produced?
©. Briefly describe the three main categories of economic systems that answer the
three questions that arise from scarcity. (6 points)
Tr Command economies Cerra) Govenmen) planers arse Mee
questions. Ta market economies wdivdual producers
Conumes amswer Hen Ta troditonal economies these
anwers ave bosal on tradition.
D. What are the four goals of most economic systems? (4 points)
FRicvercy , price mStoblity, Full amploymert and economec
grout
Copyright © 2021 Apex Learning, Se Terms of Use for further information,AP Macroeconomics bales
Test: What Is Economics?
Full Name: {NO} Sexes User Name: Anauie. 4ores, pate: F/A2223
(oaneeay
E. Explain how economists define capital. What are two types of capital? (4 points)
Capital i att sve mackinery, epuipmens, buildings ard human
Skills used fo manage ard produce goods awd services. Two hypes
OF captal cre physical capital and Human capil
F. How is the price of a good or service determined in a market system? (2 points)
The price of agoed or sevice ma oukek system iS det
by As Seavey. TP He geod or sevice 35 generally scarcer ik
gece will be laigher vice verso
ened
6. What is a free good? Give an example of a free good. (2 points)
fiee gees ave tnisgs Hat perple ward and can gb for
free “becouse they're nok scarce. for examfe av is a free good
2. The Economy and the Government
[A. What isa laissez-faire economic policy? (3 points) ;
Dr odvocates minima) government Wevertion tm econor'
affauis, promoting free marbets ard wdivdual economic
Freedom.
Adam Smith, a prominent and influential early economist, advocated a laissez-
faire policy. He described a phenomenon of market economies, which he called
the “invisible hand." What is the invisible hand? (6 points)
Tis the SeP-requlating nature of a market economy - Seivdlals
pursuing Yrer Se-meeret unirkervonally Contribute to the
Ovevalh economic. wellbeing oe seetthy Prrough Pre mashel
economic System.
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AP Macroeconomics 5
Test: What Is Economics?
fatnane: Mnpayce ores ve tne ie oan 2/22
mie Moni foes
3. Price as a Rationing Tool
‘A. How does price ration scarce goods in a market economy? (4 points)
Price akon scasces goals m a mashet Economy 4 on4 ee
Hat ave vey scute very expensive wi aati, “the amount
Feduces Le nurtbey of people wilting to buy
KE people will buy.
An increase in price provides information about the relative scarcity of a good.
What does it say? (4 points)
thy of
An increase m price signals Mwreaged Scaycry ae Ci
Encouraging Consumers empradu te reduce COnsumpro:
producer? f increase Supply
©. An increase in price may be caused by either of two things. What are those two
‘things? (4 points) Se
Increased demand or decreased supply m the mare
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