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






2. Inflation accompanied by simultaneous increases in prices and unemployment






3. According to Keynesian theory - AS curve is __________






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






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






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






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






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. The budget must be balanced each year






10. Keynesian economics believes that AD is ________






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






12. Relationship between inflation and unemployment






13. Accumulation of government deficits






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






16. The price level rises and money loses value






17. Money is at the root of aggregate demand






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






19. A sudden and drastic change in the supply curve






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






21. Basic Keynesian economic equation






22. Rational Expectations Theorists






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






24. _________ will prefer to consume than to save






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






26. Classical economists believe that the AS curve is _______






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






28. The competition in the marketplace provides economic stability






29. Encourage foreign investment






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






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






32. Relation between inflation and unemployment






33. Fundamental equation of monetarism






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






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






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






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






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






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






40. Inflation that results from an initial increase in costs






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






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






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






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






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






46. One source of public debt






47. This consequence of national debt may lead to inflation






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