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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. Accumulation of government deficits






2. The competition in the marketplace provides economic stability






3. Inflation that results from an initial increase in costs






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






5. Relation between inflation and unemployment






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






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






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






9. Fundamental equation of monetarism






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






11. One source of public debt






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






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






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






15. The budget must be balanced each year






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






17. This consequence of national debt may lead to inflation






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






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






20. Classical economists believe that the AS curve is _______






21. Keynesian economics believes that AD is ________






22. Rational Expectations Theorists






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






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






25. Encourage foreign investment






26. 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






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






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






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






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






31. Basic Keynesian economic equation






32. 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






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






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






35. According to Keynesian theory - AS curve is __________






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






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






38. Money is at the root of aggregate demand






39. The price level rises and money loses value






40. Relationship between inflation and unemployment






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






42. _________ will prefer to consume than to save






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






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






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






46. Inflation accompanied by simultaneous increases in prices and unemployment






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






48. A sudden and drastic change in the supply curve