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






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






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






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






5. Inflation accompanied by simultaneous increases in prices and unemployment






6. Relation between inflation and unemployment






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






8. Keynesian economics believes that AD is ________






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






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






11. The budget must be balanced each year






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






13. According to Keynesian theory - AS curve is __________






14. 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






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






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






17. This consequence of national debt may lead to inflation






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






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






20. 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






21. Classical economists believe that the AS curve is _______






22. A sudden and drastic change in the supply curve






23. Fundamental equation of monetarism






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






25. Rational Expectations Theorists






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






27. Basic Keynesian economic equation






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






29. _________ will prefer to consume than to save






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






31. Inflation that results from an initial increase in costs






32. One source of public debt






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






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






35. Accumulation of government deficits






36. Encourage foreign investment






37. Money is at the root of aggregate demand






38. Relationship between inflation and unemployment






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






40. The price level rises and money loses value






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






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






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






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






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






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






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






48. The competition in the marketplace provides economic stability