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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. Classical economists believe that the AS curve is _______






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






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






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






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






7. A sudden and drastic change in the supply curve






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






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






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






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






12. Inflation that results from an initial increase in costs






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






14. The price level rises and money loses value






15. Keynesian economics believes that AD is ________






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






17. Basic Keynesian economic equation






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






19. The budget must be balanced each year






20. Accumulation of government deficits






21. Relationship between inflation and unemployment






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






23. 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






24. Encourage foreign investment






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






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






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






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






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






30. According to Keynesian theory - AS curve is __________






31. Money is at the root of aggregate demand






32. Relation between inflation and unemployment






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






34. Rational Expectations Theorists






35. 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






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






37. This consequence of national debt may lead to inflation






38. The competition in the marketplace provides economic stability






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






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






41. Fundamental equation of monetarism






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






43. Inflation accompanied by simultaneous increases in prices and unemployment






44. _________ will prefer to consume than to save






45. One source of public debt






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






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






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