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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. _________ will prefer to consume than to save






2. A sudden and drastic change in the supply curve






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






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






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






6. 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






7. Inflation that results from an initial increase in costs






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






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






10. Basic Keynesian economic equation






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






12. Inflation accompanied by simultaneous increases in prices and unemployment






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






14. Encourage foreign investment






15. 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






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






17. Accumulation of government deficits






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






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






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






21. The budget must be balanced each year






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. Relation between inflation and unemployment






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






26. The price level rises and money loses value






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






28. Fundamental equation of monetarism






29. According to Keynesian theory - AS curve is __________






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






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






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






33. Keynesian economics believes that AD is ________






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






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






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






37. Rational Expectations Theorists






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






39. The competition in the marketplace provides economic stability






40. Classical economists believe that the AS curve is _______






41. One source of public debt






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






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






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






45. Relationship between inflation and unemployment






46. Money is at the root of aggregate demand






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






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