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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. Which kind of inflation avoids some of the costs?






2. Encourage foreign investment






3. One source of public debt






4. 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






5. Inflation that results from an initial increase in costs






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






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






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






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






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






11. According to Keynesian theory - AS curve is __________






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






13. Relationship between inflation and unemployment






14. The budget must be balanced each year






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






16. Keynesian economics believes that AD is ________






17. _________ will prefer to consume than to save






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






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






20. Money is at the root of aggregate demand






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






22. A sudden and drastic change in the supply curve






23. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






27. Accumulation of government deficits






28. Rational Expectations Theorists






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






30. 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






31. The competition in the marketplace provides economic stability






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






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






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






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






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






37. Basic Keynesian economic equation






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






39. The price level rises and money loses value






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






41. Classical economists believe that the AS curve is _______






42. This consequence of national debt may lead to inflation






43. Fundamental equation of monetarism






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






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






46. Relation between inflation and unemployment






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






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