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






3. Inflation that results from an initial increase in costs






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






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






6. Accumulation of government deficits






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






8. According to Keynesian theory - AS curve is __________






9. The price level rises and money loses value






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






11. Encourage foreign investment






12. Rational Expectations Theorists






13. 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






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






15. Inflation accompanied by simultaneous increases in prices and unemployment






16. A sudden and drastic change in the supply curve






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






18. 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






19. Money is at the root of aggregate demand






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






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






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






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






24. This consequence of national debt may lead to inflation






25. Relationship between inflation and unemployment






26. One source of public debt






27. Keynesian economics believes that AD is ________






28. Basic Keynesian economic equation






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






30. Fundamental equation of monetarism






31. Classical economists believe that the AS curve is _______






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






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






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






35. The budget must be balanced each year






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






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






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






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






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






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






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






43. _________ will prefer to consume than to save






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






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






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






47. Relation between inflation and unemployment






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






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