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






2. Encourage foreign investment






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






4. Inflation that results from an initial increase in costs






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






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






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






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






9. The budget must be balanced each year






10. Keynesian economics believes that AD is ________






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






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






13. Relationship between inflation and unemployment






14. The price level rises and money loses value






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






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






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






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






19. Inflation accompanied by simultaneous increases in prices and unemployment






20. Rational Expectations Theorists






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






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






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






24. One source of public debt






25. Relation between inflation and unemployment






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






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






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






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






32. A sudden and drastic change in the supply curve






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






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






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






36. Accumulation of government deficits






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






38. _________ will prefer to consume than to save






39. According to Keynesian theory - AS curve is __________






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






41. 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






42. Fundamental equation of monetarism






43. Basic Keynesian economic equation






44. The competition in the marketplace provides economic stability






45. Money is at the root of aggregate demand






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






47. Classical economists believe that the AS curve is _______






48. This consequence of national debt may lead to inflation