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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. Relationship between inflation and unemployment






3. 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






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






5. Encourage foreign investment






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






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






8. Basic Keynesian economic equation






9. The price level rises and money loses value






10. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






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






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






17. Keynesian economics believes that AD is ________






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






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






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






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






22. This consequence of national debt may lead to inflation






23. Fundamental equation of monetarism






24. Inflation that results from an initial increase in costs






25. Classical economists believe that the AS curve is _______






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






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






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






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






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






31. Accumulation of government deficits






32. 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






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






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






35. A sudden and drastic change in the supply curve






36. Relation between inflation and unemployment






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






38. The budget must be balanced each year






39. _________ will prefer to consume than to save






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






41. According to Keynesian theory - AS curve is __________






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






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






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






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






46. One source of public debt






47. Rational Expectations Theorists






48. Money is at the root of aggregate demand