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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 20 minutes. 2 minutes extra for reading the instructions.
  • 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. _____ tend to alter the behaviour of the public when imposed by the government






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






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






4. Relationship between inflation and unemployment






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






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






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






8. Inflation that results from an initial increase in costs






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






10. The budget must be balanced each year






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






12. Basic Keynesian economic equation






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






14. Relation between inflation and unemployment






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






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






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






18. According to Keynesian theory - AS curve is __________






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






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






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






22. The price level rises and money loses value






23. Money is at the root of aggregate demand






24. 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






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






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






27. The competition in the marketplace provides economic stability






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






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






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






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






32. 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






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






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






35. One source of public debt






36. Accumulation of government deficits






37. A sudden and drastic change in the supply curve






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






39. Encourage foreign investment






40. This consequence of national debt may lead to inflation






41. Keynesian economics believes that AD is ________






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






43. Fundamental equation of monetarism






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






45. Classical economists believe that the AS curve is _______






46. Rational Expectations Theorists






47. Inflation accompanied by simultaneous increases in prices and unemployment






48. _________ will prefer to consume than to save