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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

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. Prices adjust in a natural way to bring the markets for goods and labor into equilibrium






2. PQ or price level times physical volume of goods and services - is equal to...






3. A sudden and drastic change in the supply curve






4. Inflation accompanied by simultaneous increases in prices and unemployment






5. New Classical Economists assert that households and firms pursue economics for their own ____-_________






6. According to Keynesian theory - AS curve is __________






7. According to Keynesian economists - this could pull the economy out of a recession or depression






8. Inflation that results from an initial increase in aggregate demand






9. In the short-run prices and wages are downwardly inflexible






10. Encourage foreign investment






11. Accumulation of government deficits






12. This kind of fiscal policy is necessary for a balanced budget - would tend to magnify the changes in the economy - and make the business cycle more pronounced






13. Modern fiscal policy favors this kind of budgets for the purpose of economic stabilization






14. This kind of budget exerts counter-cyclical pressure on the economy - balancing the budgets in the bad times with the surpluses of the good times






15. Keynesian economics believes that AD is ________






16. Money is at the root of aggregate demand






17. Basic Keynesian economic equation






18. Rational Expectations Theorists






19. The budget must be balanced each year






20. Large annual debts create this - promoting imports and stifling exports






21. Amount spent = amount received - which is equation of exchange






22. _________ will prefer to consume than to save






23. Money supply - velocity - price level - physical volume of goods and services






24. Taxes and transfer payments that stabilize GDP without requiring policymakers to take explicit actions






25. Fundamental equation of monetarism






26. The use of monetary policy by the central bank to cushion the blow of aggregate supply shocks






27. The price level rises and money loses value






28. Relationship between inflation and unemployment






29. This consequence of national debt may lead to inflation






30. One source of public debt






31. Believe that markets are highly competitive and adjust prices quickly to changes in supply and demand






32. The economy may stagnate in the absence of proper work - saving and investment incentives






33. ______ ______ is most important in a monetarist's view for determining output - price and employment levels






34. Balancing the budget is secondary to ensuring that the economy runs at a non-inflationary full employment level






35. Classical economists believe that the AS curve is _______






36. According to classical economics - AD curve is stable if....






37. The competition in the marketplace provides economic stability






38. According to RET - cost of this depends on whether or not it is expected






39. Keynesian economists believe that monetary policy is a ____ tool for economic stability






40. The government must go to the money markets and compete with the private sector for funds






41. Three ways the government could reduce deficit: increase/decrease (1) taxes - (2) spending - and (3) interest rates






42. Inflation that results from an initial increase in costs






43. Which kind of inflation avoids some of the costs?






44. Feeds on interest payments & limits a government's ability to use discretionary stabilization policies






45. Relation between inflation and unemployment






46. NCE/RET imply that the aggregate supply curve is _______






47. _____ tend to alter the behaviour of the public when imposed by the government






48. Using taxes and spending to influence the level of GDP in the short run