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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. Inflation that results from an initial increase in aggregate demand






2. The competition in the marketplace provides economic stability






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






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






5. 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






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






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






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






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






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






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






12. Relationship between inflation and unemployment






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






14. Relation between inflation and unemployment






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






16. Basic Keynesian economic equation






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






18. Fundamental equation of monetarism






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






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






21. The budget must be balanced each year






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






23. 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






24. A sudden and drastic change in the supply curve






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






26. Accumulation of government deficits






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






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






29. Inflation accompanied by simultaneous increases in prices and unemployment






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






31. One source of public debt






32. Encourage foreign investment






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






34. Inflation that results from an initial increase in costs






35. _________ will prefer to consume than to save






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






37. According to Keynesian theory - AS curve is __________






38. The price level rises and money loses value






39. Classical economists believe that the AS curve is _______






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






41. This consequence of national debt may lead to inflation






42. Keynesian economics believes that AD is ________






43. Rational Expectations Theorists






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






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






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






47. Money is at the root of aggregate demand






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