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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 competition in the marketplace provides economic stability






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






3. One source of public debt






4. Classical economists believe that the AS curve is _______






5. _________ will prefer to consume than to save






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






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






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






9. Rational Expectations Theorists






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






11. Fundamental equation of monetarism






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. Keynesian economics believes that AD is ________






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






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






16. Money is at the root of aggregate demand






17. Encourage foreign investment






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






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






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






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






22. Relationship between inflation and unemployment






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






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






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






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






27. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






30. 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






31. A sudden and drastic change in the supply curve






32. This consequence of national debt may lead to inflation






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






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






35. According to Keynesian theory - AS curve is __________






36. Inflation that results from an initial increase in costs






37. The budget must be balanced each year






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






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






40. Relation between inflation and unemployment






41. The price level rises and money loses value






42. Accumulation of government deficits






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






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






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






46. Basic Keynesian economic equation






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






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