Unit 1: Basic Economic Concepts
Macro · Unit 1 · Paper 1

Basic Economic Concepts unit test

A test on this unit alone, marked as a percentage and a letter grade — for the test your class is actually sitting, rather than for May. Answer everything, then submit once: seeing the answer to question 3 before attempting question 4 makes the final percentage meaningless.

Paper 1Paper 2Paper 3
Each paper is built from this unit’s 20 terms and is the same for everyone, so a teacher can assign “Unit 1, Paper 1” and every student sits the identical test. Multiple choice is marked objectively; the written sections you mark yourself against the model answer and rubric.
Suggested time 33 min 30 points0/17 attempted
1

Terms of trade

2

Finding comparative advantage from an input table

3

Absolute advantage

4

Efficiency (productive)

5

Trade-off vs opportunity cost

6

Movement along vs shift of the PPC

7

Finding comparative advantage from an output table

8

Scarcity

9

Production possibilities curve (PPC)

10

Factors of production

11

Causes of outward PPC shifts

12

Gains from trade

Short answer 1. Define or explain: Why the PPC bows outward

3 pts

Short answer 2. Define or explain: Opportunity cost

3 pts

Short answer 3. Define or explain: Ceteris paribus

3 pts

Short answer 4. Define or explain: A straight-line PPC

3 pts

Free response

6 pts

This course has no free-response prompt tagged to this unit, so one from elsewhere in the course is used. It is still worth writing — the skill transfers.

Loriland is producing below full employment (a recessionary gap).

Draw a correctly labeled AD-AS graph showing the current short-run equilibrium relative to full-employment output Yf.

Identify one fiscal policy to close the gap.

Using the money market, show and explain the effect of an expansionary open-market operation on the nominal interest rate.

Explain how that interest-rate change affects AD and real GDP.