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






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






3. Encourage foreign investment






4. Money is at the root of aggregate demand






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






6. Relationship between inflation and unemployment






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






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






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






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






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






13. According to Keynesian theory - AS curve is __________






14. Classical economists believe that the AS curve is _______






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






16. Inflation accompanied by simultaneous increases in prices and unemployment






17. The competition in the marketplace provides economic stability






18. Inflation that results from an initial increase in costs






19. A sudden and drastic change in the supply curve






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






21. 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






22. Basic Keynesian economic equation






23. The price level rises and money loses value






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






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






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






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






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






29. Rational Expectations Theorists






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






31. _________ will prefer to consume than to save






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






33. Relation between inflation and unemployment






34. Fundamental equation of monetarism






35. This consequence of national debt may lead to inflation






36. Keynesian economics believes that AD is ________






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






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






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






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






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






42. One source of public debt






43. Accumulation of government deficits






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






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






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






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






48. The budget must be balanced each year