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






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






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






4. The budget must be balanced each year






5. According to Keynesian theory - AS curve is __________






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






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






8. 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






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






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






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






12. This consequence of national debt may lead to inflation






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






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






15. Rational Expectations Theorists






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






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






18. 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






19. Money is at the root of aggregate demand






20. One source of public debt






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






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






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






24. Relation between inflation and unemployment






25. Inflation accompanied by simultaneous increases in prices and unemployment






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






27. Fundamental equation of monetarism






28. _________ will prefer to consume than to save






29. Keynesian economics believes that AD is ________






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






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






32. Encourage foreign investment






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






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






35. Inflation that results from an initial increase in costs






36. Basic Keynesian economic equation






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






38. Accumulation of government deficits






39. A sudden and drastic change in the supply curve






40. Relationship between inflation and unemployment






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






42. The price level rises and money loses value






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






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






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






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






47. Classical economists believe that the AS curve is _______






48. The competition in the marketplace provides economic stability