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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. Accumulation of government deficits






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






3. The price level rises and money loses value






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






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






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






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






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






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






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






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






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






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






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






15. 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






16. This consequence of national debt may lead to inflation






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






18. According to Keynesian theory - AS curve is __________






19. A sudden and drastic change in the supply curve






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






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






22. Rational Expectations Theorists






23. 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






24. _________ will prefer to consume than to save






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






26. Relationship between inflation and unemployment






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






28. Basic Keynesian economic equation






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






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






31. Money is at the root of aggregate demand






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






35. Inflation that results from an initial increase in costs






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






37. Keynesian economics believes that AD is ________






38. Classical economists believe that the AS curve is _______






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






40. Relation between inflation and unemployment






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






42. Inflation accompanied by simultaneous increases in prices and unemployment






43. One source of public debt






44. Fundamental equation of monetarism






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






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






47. The competition in the marketplace provides economic stability






48. Encourage foreign investment