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






2. Rational Expectations Theorists






3. Basic Keynesian economic equation






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






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






6. One source of public debt






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






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






9. The price level rises and money loses value






10. Inflation that results from an initial increase in costs






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






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






13. According to Keynesian theory - AS curve is __________






14. Accumulation of government deficits






15. Relation between inflation and unemployment






16. 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






17. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






21. Classical economists believe that the AS curve is _______






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






23. Fundamental equation of monetarism






24. Money is at the root of aggregate demand






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






26. A sudden and drastic change in the supply curve






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






28. Relationship between inflation and unemployment






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






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






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






32. The competition in the marketplace provides economic stability






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






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






35. This consequence of national debt may lead to inflation






36. The budget must be balanced each year






37. _________ will prefer to consume than to save






38. Encourage foreign investment






39. Keynesian economics believes that AD is ________






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






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






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






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






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






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






46. 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






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






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