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






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






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






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






5. A sudden and drastic change in the supply curve






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






7. _________ will prefer to consume than to save






8. Relationship between inflation and unemployment






9. Rational Expectations Theorists






10. The competition in the marketplace provides economic stability






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






12. Fundamental equation of monetarism






13. The budget must be balanced each year






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






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






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






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






18. Classical economists believe that the AS curve is _______






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






20. Money is at the root of aggregate demand






21. According to Keynesian theory - AS curve is __________






22. One source of public debt






23. Basic Keynesian economic equation






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






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






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






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






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






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






30. The price level rises and money loses value






31. Inflation accompanied by simultaneous increases in prices and unemployment






32. Accumulation of government deficits






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






34. Inflation that results from an initial increase in costs






35. Relation between inflation and unemployment






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






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






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






39. Encourage foreign investment






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






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






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






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






44. This consequence of national debt may lead to inflation






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






46. 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






47. Keynesian economics believes that AD is ________






48. 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