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






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






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






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






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






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






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






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






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






10. Classical economists believe that the AS curve is _______






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






12. The budget must be balanced each year






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






14. Rational Expectations Theorists






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






16. Inflation that results from an initial increase in costs






17. Relationship between inflation and unemployment






18. One source of public debt






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






20. Inflation accompanied by simultaneous increases in prices and unemployment






21. The price level rises and money loses value






22. Relation between inflation and unemployment






23. A sudden and drastic change in the supply curve






24. 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






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






26. Basic Keynesian economic equation






27. This consequence of national debt may lead to inflation






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






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






30. _________ will prefer to consume than to save






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






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






34. The competition in the marketplace provides economic stability






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






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






37. According to Keynesian theory - AS curve is __________






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






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






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






41. Fundamental equation of monetarism






42. Accumulation of government deficits






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






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






45. Money is at the root of aggregate demand






46. Keynesian economics believes that AD is ________






47. Encourage foreign investment






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