AP Macroeconomics: AP Intro Economics Quiz

Basic concepts in economics applicable to both Macroeconomics and Microeconomics include the circular flow model and production possibilities frontier. Production is efficient at the production possiblities frontier and is inefficient below it. Production is only beyond the frontier in war generally. Circular flow model describes the flow of money and products through the economy. It divides markets into markets for goods and services or markets for factors of production (land, labor, capital), and represents all actors as households, firms, or the government.