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






3. Basic Keynesian economic equation






4. Inflation that results from an initial increase in costs






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






6. Keynesian economics believes that AD is ________






7. The budget must be balanced each year






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






9. One source of public debt






10. A sudden and drastic change in the supply curve






11. _________ will prefer to consume than to save






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






13. Accumulation of government deficits






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






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






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






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






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






19. Fundamental equation of monetarism






20. Relationship between inflation and unemployment






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






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






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






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






25. Classical economists believe that the AS curve is _______






26. Rational Expectations Theorists






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






28. Encourage foreign investment






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






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






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






32. According to Keynesian theory - AS curve is __________






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






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






35. Relation between inflation and unemployment






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






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






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






39. Money is at the root of aggregate demand






40. This consequence of national debt may lead to inflation






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






42. 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






43. 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






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






45. The competition in the marketplace provides economic stability






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






47. Inflation accompanied by simultaneous increases in prices and unemployment






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