AP Macroeconomics Practice Exam Questions: Scarcity and Positive Statements Vs Normative Statements in Economics

In this quick lesson, we explain the concepts of scarcity, and the differences between positive statements and normative statements in AP Macroeconomics. We also have AP Macroeconomics practice exam questions to test your knowledge.

What is Scarcity in AP Macroeconomics?

Scarcity is Limited quantities of resources to meet unlimited wants .

Scarcity Concept: AP Macroeconomics Practice Exam Questions

Economics is the study of how people seek to satisfy their needs and wants by making choices

Economics is primarily concerned with the study of
a. allocating scarce resources to satisfy unlimited wants.
b. how new wants and economic resources are produced.
c. determining how the government should allocate resources.
d. how to make more effective use of resources through reducing wants.

Economics is the study of how:
a.interest rates are set by the government
b.the stock market reflects the ongoing level of business
c.a society uses scarce resources to produce and distribute goods and services
d.a dollar value is placed on a country’s assets

When economists say that economic goods are scarce goods they mean the word scarce in the sense that:
a. there are not enough resources to fulfil everyone’s wants to satiety
b. there are very few of these goods
c. the goods are sold in markets.
d. the goods are limited in supply.

In general, economics is the study of
a) The allocation of scarce wants to unlimited resources.
b) The allocation of unlimited wants to scarce resources.
c) The allocation of resources between the government and the private sector.
d) The allocation of workers between firms.

The study of economics cannot proceed without the assumption that
a. all human action is selfish.
b. all human action is rational.
c. all human action is self interested.
d. all of the above.
e. b and c of the above

Positive Statements Vs Normative Statements in AP Macroeconomics

Normative Economics are Claims that attempt to describe the world AS HOW IT SHOULD BE

Positive Economics are Claims that attempt to describe the world AS IT IS

Factors of Production are inputs or resources that go into the production function to produce goods and services: land, labor, capital, entrepreneurship

Positive /normative economics Concept: AP Macroeconomics Practice Exam QUestions

Which of the following is an example of a positive statement?
(a) If welfare payments increase, the world will be a better place.
(b) Prices rise when the government prints too much money.
(c) Inflation is more harmful to the economy than unemployment.
(d) Improved equity is more important than the reduced efficiency.

Which of the following is an example of a normative statement?
(a) If the price of a product decreases, quantity demanded increases.
(b) Reducing tax rates on the wealthy would be good for the country.
(c) If the national saving rate were to increase, so would the rate of economic growth.
(d) All of the above are normative statements.

Normative statements are
(a) descriptive, making a claim about how the world is.
(b) statements about the normal condition of the world.
(c) prescriptive, making a claim about how the world ought to be.
(d) statements which establish production goals for the economy.

Which of the following is a normative statement?
a. Lower interest rates encourage people to borrow.
b. A higher interest rate encourages people to save more
c. If the price of eggs fell, then people would probably buy more eggs
d. There should be a higher tax on cigarettes, alcohol and other “sin” items to discourage people from buying them.

Analysis that does not impose the value judgments of one individual on the decision of others is called ___ analysis.
a. Positive
b. Normative
c. Economic
d. the scientific method of

Which of the following is a normative statement?
a. Planned economies allocate resources via government departments
b. Most transitional economies have experienced problems of falling output and rising prices over the past decade.
c. There is a greater degree of consumer sovereignty in market economies than planned economies
d. Reducing inequality should be a major priority for mixed economies

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