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






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






3. Rational Expectations Theorists






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






5. Relationship between inflation and unemployment






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






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






8. A sudden and drastic change in the supply curve






9. Accumulation of government deficits






10. One source of public debt






11. According to Keynesian theory - AS curve is __________






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






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






14. Fundamental equation of monetarism






15. _________ will prefer to consume than to save






16. Classical economists believe that the AS curve is _______






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






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






19. The price level rises and money loses value






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






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






22. Keynesian economics believes that AD is ________






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






24. Inflation accompanied by simultaneous increases in prices and unemployment






25. 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






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






27. Inflation that results from an initial increase in costs






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






29. This consequence of national debt may lead to inflation






30. Money is at the root of aggregate demand






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






32. The budget must be balanced each year






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






34. The competition in the marketplace provides economic stability






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






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






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






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






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






40. 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






41. Relation between inflation and unemployment






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






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






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






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






46. Encourage foreign investment






47. Basic Keynesian economic equation






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