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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. Encourage foreign investment






2. Inflation that results from an initial increase in costs






3. The competition in the marketplace provides economic stability






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






5. Classical economists believe that the AS curve is _______






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






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






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






9. A sudden and drastic change in the supply curve






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






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






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






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






14. The price level rises and money loses value






15. Relationship between inflation and unemployment






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






17. _________ will prefer to consume than to save






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






19. Keynesian economics believes that AD is ________






20. Money is at the root of aggregate demand






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






22. 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






23. Relation between inflation and unemployment






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






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






26. 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






27. Accumulation of government deficits






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






29. According to Keynesian theory - AS curve is __________






30. One source of public debt






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






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






33. The budget must be balanced each year






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






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






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






37. Rational Expectations Theorists






38. Basic Keynesian economic equation






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






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






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






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






43. This consequence of national debt may lead to inflation






44. Fundamental equation of monetarism






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






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






47. Inflation accompanied by simultaneous increases in prices and unemployment






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