Macroeconomics CLEP prep Exam Questions and Answers Already Passed
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Macroeconomics
Institution
Macroeconomics
Macroeconomics CLEP prep Exam Questions and Answers Already Passed
LRAS - Answers Long Run Aggregate Supply, The natural level of GDP, shown vertical on a graph. When LRAS shifts, SRAS (Short Run Aggregate Supply) will follow .
Tangible Assets - Answers Real Estate, Equipment, and Cash (physical...
Macroeconomics CLEP prep Exam Questions and Answers Already Passed
LRAS - Answers Long Run Aggregate Supply, The natural level of GDP, shown vertical on a graph. When
LRAS shifts, SRAS (Short Run Aggregate Supply) will follow .
Tangible Assets - Answers Real Estate, Equipment, and Cash (physical assets)
Substitution effect - Answers Economic rule stating that if two items satisfy the same need and the price
of one rises, people will buy the other.
Equilibrium price - Answers The price at which the number of products that businesses are willing to
supply equals the amount of products that consumers are willing to buy at a specific point in time.
Excess Supply - Answers When quantity supplied is more than quantity demanded. The formula for
excess supply is: Supply - Demand = Excess Supply
Reservation price - Answers Maximum price that a customer is willing to pay for a good
Buyer's surplus - Answers The difference between a buyer's reservation price (the price they want to
pay) and the actual price paid for a good or service
Seller's surplus - Answers The difference between the price received by the seller and the seller's
reservation price
Total surplus - Answers The difference between the buyer's reservation price and the seller's reservation
price. Consumer surplus + Producer surplus
Free market - Answers A market with unrestricted trading of goods, where the prices of goods are
determined by supply and demand.
Traditional economic system - Answers In a traditional economic system, the availability of resources is
based on inheritance. Goods are only produced for consumption and surpluses do not occur. This type
of economy is normally found in South American, Asian, and African countries.
Command economic system - Answers 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.
Mixed market - Answers Combines pure market and command.
Example: Japan
Law of Diminishing Marginal Utility - Answers A law stating that as a person consumes additional units of
a good, eventually the utility gained from each additional unit of the good decreases.
, Law of Demand - Answers A law stating that as the price of a product increases the demand of that
product decreases, while if the price of a product decreases the demand for that product increases.
Law of Supply - Answers 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.
Liquidity - Answers The ease with which an asset can be converted to currency.
Macroeconomics - Answers The part of economics study that looks at the operation of a nation's
economy as a whole
Asset - Answers (n) something of value; a resource; an advantage
Standard of living - Answers The degree to which people have access to goods and services that make
their lives better.
Labor productivity - Answers The output per employed worker
Seller's reservation price - Answers The smallest dollar amount for which a seller would be willing to sell
an additional unit, generally equal to marginal cost
Aggregation - Answers The adding up of individual economic variables to obtain a large, general picture
of the economy.
Aggregate demand - Answers The total demand for a country's output. It includes demands for
consumption, investment, government purchases, and net exports.
Aggregate supply - Answers Total supply of goods and services in an economy
Business cycle - Answers A record of economic increases and decreases over time.
Capitalism - Answers A free market system that relies on private property ownership and supply and
demand
Businesses - Answers Sole proprietorships, partnerships, and corporations are private producing units of
the economy knows as __________.
Partnership - Answers Unicorporated entity that has shared ownership.
Corporation - Answers Legal entity that has received a charter from a state or federal government.
Sole proprietorship - Answers Business entity which legally has no separate existence from its owner.
Adam Smith - Answers A Scottish man (1723-1790) who is known as the father of modern economics.
Invisible hand - Answers A phrase coined by Adam Smith to describe the process that turns self directed
gain into social and economic benefits for all.
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