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Test your basic knowledge |

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






2. Accumulation of government deficits






3. According to Keynesian theory - AS curve is __________






4. Inflation that results from an initial increase in costs






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






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






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






8. Encourage foreign investment






9. 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






10. A sudden and drastic change in the supply curve






11. The price level rises and money loses value






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






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






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






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






16. Rational Expectations Theorists






17. The budget must be balanced each year






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






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






20. Relationship between inflation and unemployment






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






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






23. This consequence of national debt may lead to inflation






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






25. _________ will prefer to consume than to save






26. Keynesian economics believes that AD is ________






27. Classical economists believe that the AS curve is _______






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






29. Relation between inflation and unemployment






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






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






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






33. Money is at the root of aggregate demand






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






35. The competition in the marketplace provides economic stability






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






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






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






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






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






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






42. One source of public debt






43. Basic Keynesian economic equation






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






45. Fundamental equation of monetarism






46. Inflation accompanied by simultaneous increases in prices and unemployment






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






48. 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






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