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






2. Basic Keynesian economic equation






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






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






5. Rational Expectations Theorists






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






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






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






9. Encourage foreign investment






10. _________ will prefer to consume than to save






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






12. Fundamental equation of monetarism






13. Inflation that results from an initial increase in costs






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






15. 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






16. The competition in the marketplace provides economic stability






17. Money is at the root of aggregate demand






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






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






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






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






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






23. According to Keynesian theory - AS curve is __________






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






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






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






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






28. A sudden and drastic change in the supply curve






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. This consequence of national debt may lead to inflation






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






32. Inflation accompanied by simultaneous increases in prices and unemployment






33. The budget must be balanced each year






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






35. Keynesian economics believes that AD is ________






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






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






38. Classical economists believe that the AS curve is _______






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






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






41. Relationship between inflation and unemployment






42. The price level rises and money loses value






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






44. Accumulation of government deficits






45. Relation between inflation and unemployment






46. One source of public debt






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






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