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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. The competition in the marketplace provides economic stability






2. Relation between inflation and unemployment






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






4. According to Keynesian theory - AS curve is __________






5. This consequence of national debt may lead to inflation






6. Encourage foreign investment






7. 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






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






9. Keynesian economics believes that AD is ________






10. _________ will prefer to consume than to save






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






12. The budget must be balanced each year






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






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






15. Classical economists believe that the AS curve is _______






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






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






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






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






20. One source of public debt






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






22. Rational Expectations Theorists






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






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






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






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






27. A sudden and drastic change in the supply curve






28. Inflation accompanied by simultaneous increases in prices and unemployment






29. Money is at the root of aggregate demand






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






31. Inflation that results from an initial increase in costs






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






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






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






35. Relationship between inflation and unemployment






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






37. 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






38. Basic Keynesian economic equation






39. Fundamental equation of monetarism






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






41. Accumulation of government deficits






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






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






44. The price level rises and money loses value






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






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






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






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