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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 price level rises and money loses value






2. 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






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






4. Accumulation of government deficits






5. Fundamental equation of monetarism






6. Classical economists believe that the AS curve is _______






7. Rational Expectations Theorists






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






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






10. Relationship between inflation and unemployment






11. Keynesian economics believes that AD is ________






12. 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






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






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






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






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






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






18. A sudden and drastic change in the supply curve






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






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






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






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






23. Basic Keynesian economic equation






24. Inflation accompanied by simultaneous increases in prices and unemployment






25. According to Keynesian theory - AS curve is __________






26. The competition in the marketplace provides economic stability






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






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






29. Relation between inflation and unemployment






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






31. _________ will prefer to consume than to save






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






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






34. The budget must be balanced each year






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






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






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






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






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






40. This consequence of national debt may lead to inflation






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






42. Inflation that results from an initial increase in costs






43. Money is at the root of aggregate demand






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






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






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






47. Encourage foreign investment






48. One source of public debt