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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. Relationship between inflation and unemployment






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






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






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






5. A sudden and drastic change in the supply curve






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






7. Accumulation of government deficits






8. Rational Expectations Theorists






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






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






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






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






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






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






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






16. This consequence of national debt may lead to inflation






17. Relation between inflation and unemployment






18. _________ will prefer to consume than to save






19. The competition in the marketplace provides economic stability






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






21. Keynesian economics believes that AD is ________






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






23. The budget must be balanced each year






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






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






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. One source of public debt






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






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






30. According to Keynesian theory - AS curve is __________






31. Encourage foreign investment






32. Inflation accompanied by simultaneous increases in prices and unemployment






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






34. Fundamental equation of monetarism






35. Basic Keynesian economic equation






36. 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






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






38. Inflation that results from an initial increase in costs






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






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






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






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






43. Money is at the root of aggregate demand






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






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






46. The price level rises and money loses value






47. Classical economists believe that the AS curve is _______






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