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






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






4. Accumulation of government deficits






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






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






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






8. Basic Keynesian economic equation






9. Relationship between inflation and unemployment






10. 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






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






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






13. The price level rises and money loses value






14. Rational Expectations Theorists






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






16. One source of public debt






17. According to Keynesian theory - AS curve is __________






18. Money is at the root of aggregate demand






19. This consequence of national debt may lead to inflation






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






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






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






23. The competition in the marketplace provides economic stability






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






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






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






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






28. 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






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






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






31. _________ will prefer to consume than to save






32. Inflation accompanied by simultaneous increases in prices and unemployment






33. Classical economists believe that the AS curve is _______






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






35. Relation between inflation and unemployment






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






37. Encourage foreign investment






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






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






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






41. Keynesian economics believes that AD is ________






42. Fundamental equation of monetarism






43. The budget must be balanced each year






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






45. Inflation that results from an initial increase in costs






46. A sudden and drastic change in the supply curve






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






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