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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 price level rises and money loses value






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






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






4. A sudden and drastic change in the supply curve






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






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






7. 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






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






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






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






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






12. Encourage foreign investment






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






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






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






16. Inflation that results from an initial increase in costs






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






18. The competition in the marketplace provides economic stability






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






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






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






22. This consequence of national debt may lead to inflation






23. Rational Expectations Theorists






24. Accumulation of government deficits






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






26. Inflation accompanied by simultaneous increases in prices and unemployment






27. _________ will prefer to consume than to save






28. Money is at the root of aggregate demand






29. 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






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






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






32. Relation between inflation and unemployment






33. Classical economists believe that the AS curve is _______






34. Basic Keynesian economic equation






35. The budget must be balanced each year






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






37. Fundamental equation of monetarism






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






39. One source of public debt






40. Keynesian economics believes that AD is ________






41. Relationship between inflation and unemployment






42. According to Keynesian theory - AS curve is __________






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






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






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






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






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






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