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






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






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






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






5. Inflation that results from an initial increase in costs






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






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. Fundamental equation of monetarism






9. Relationship between inflation and unemployment






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






11. Relation between inflation and unemployment






12. The competition in the marketplace provides economic stability






13. A sudden and drastic change in the supply curve






14. Accumulation of government deficits






15. One source of public debt






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






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






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






19. The budget must be balanced each year






20. Inflation accompanied by simultaneous increases in prices and unemployment






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






22. This consequence of national debt may lead to inflation






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






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






25. Classical economists believe that the AS curve is _______






26. 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






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






28. Encourage foreign investment






29. According to Keynesian theory - AS curve is __________






30. _________ will prefer to consume than to save






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






32. Basic Keynesian economic equation






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






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






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






36. Keynesian economics believes that AD is ________






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






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






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






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






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






42. Rational Expectations Theorists






43. The price level rises and money loses value






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






45. Money is at the root of aggregate demand






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






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






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