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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 30 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. Relation between inflation and unemployment






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






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






4. Keynesian economics believes that AD is ________






5. Encourage foreign investment






6. Inflation that results from an initial increase in costs






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






8. This consequence of national debt may lead to inflation






9. One source of public debt






10. Classical economists believe that the AS curve is _______






11. _________ will prefer to consume than to save






12. The competition in the marketplace provides economic stability






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






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






15. According to Keynesian theory - AS curve is __________






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






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






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






19. Inflation accompanied by simultaneous increases in prices and unemployment






20. The budget must be balanced each year






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






22. Accumulation of government deficits






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






24. 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






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






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






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






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






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






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






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






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






33. Fundamental equation of monetarism






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






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






36. 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






37. The price level rises and money loses value






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






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






40. Money is at the root of aggregate demand






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






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






43. Rational Expectations Theorists






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






45. Basic Keynesian economic equation






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






47. A sudden and drastic change in the supply curve






48. Relationship between inflation and unemployment






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