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CLEP Macroeconomics - 3

Subjects : clep, economics
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The law that states that as the price of any good or service increases - the quantity of that good or service will increase and vice versa.

2. The smallest dollar amount for which a seller would be willing to sell an additional unit - generally equal to marginal cost

3. A phrase coined by Adam Smith to describe the process that turns self directed gain into social and economic benefits for all.

4. Government policies intended to avoid inflation and other effects due to increased expansion. Includes: Action such as decreasing government spending - increasing taxes - and decreasing the supply of money - and raising interest rates.

5. The time period between a policy's implementation and its desired effects on an economy.

6. A difference between the potential output (potential GDP) of an economy and its actual output (actual GDP)

7. If the Federal Reserve lowers the reserve ratio - it ______ the bank's required reserves and ______ the quantity of money.

8. Caused by changes in the overall economy.

9. Government policies intended to increase spending and output.

10. An economic system in which all factors of production are owned and controlled by the government. Often referred to as a centrally planned economic system. Example: Former Soviet Union.

11. The relationship between disposable income and spending on consumable goods and services

12. The ease with which an asset can be converted to currency.

13. When an economic unit makes more than it spends

14. Government policies aimed at stabilizing the economy by eliminating output gaps

15. The international sector emphasizes the ________ rate.

16. Maximum price that a customer is willing to pay for a good

17. A policy that affects potential output

18. When there is no cyclical unemployment and every person who wishes to work is able to find a job at the prevailing rate for wages and in the prevailing working conditions.

19. The lowest point of the recession

20. The total planned spending on final goods and services.

21. When goods and services are made and consumed at the best levels for the society. Nothing more can be acheived with the resources available.

22. The difference between the price received by the seller and the seller's reservation price

23. A market with unrestricted trading of goods - where the prices of goods are determined by supply and demand.

24. The price of a good or service in relation to the price of other goods and services.

25. Demonstrates that there is an inverse relationship between inflation and unemployment; as inflation increases - unemployment decreases (and vice versa).

26. The percentage of working-age people within the labor force

27. Combines pure market and command. Example: Japan

28. A flaw in the CPI that exaggerates real increases in the cost of living by failing to take into account customers ability to choose equally desirable goods or services when the price of their preferred good or service increases

29. Business entity which legally has no separate existence from its owner.

30. Caused by changes in demand or technology. Long-term and continual unemployment that continues even though the economy is producing normally

31. An increase in this would cause an increase in the aggregate supply

32. Sole proprietorships - partnerships - and corporations are private producing units of the economy knows as __________.

33. Total tax paid divided by total (taxable) income - as a percentage.

34. A record of economic increases and decreases over time.

35. The amount spent by a household on goods and services such as: entertainment - food - and other perishables.

36. The rise in taxes that occurs when before-tax income increases by one dollar

37. Long Run Aggregate Supply - The natural level of GDP - shown vertical on a graph. When LRAS shifts - SRAS (Short Run Aggregate Supply) will follow .

38. Describes how the economy directly effects the actions policymakers take.

39. The beginning of a recession

40. Refers to individuals between jobs seeking new employment - people re-entering the workforce (ie mom whose kids are grown) - and new entrants (ie college graduates).

41. A macroeconomic policy that directly affects the structure and various institutions of an economy

42. The speed that money changes hands in order to buy and sell final goods and services.

43. When the people believe that the nation's central bank will keep inflation rates low.

44. A large - unexpected change in the cost of resources.

45. Goods that are used in the production of final goods.

46. The labor sector highlights the rate of ____ .

47. When economists fail to account for improvements in goods or services and incorrectly report inflation as higher.

48. When the rate of inflation is extremely high.

49. The time between the need for a macroeconomic policy and its implementation

50. Is equal to Consumption + Government Expenditures + Investment + Exports - Imports The market value of all goods and services produced within a nation during a specified amount of time.