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






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






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






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






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






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






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






8. Rational Expectations Theorists






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






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






11. The price level rises and money loses value






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






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






14. Relationship between inflation and unemployment






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






16. The competition in the marketplace provides economic stability






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






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






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






22. According to Keynesian theory - AS curve is __________






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






24. Encourage foreign investment






25. Relation between inflation and unemployment






26. Inflation accompanied by simultaneous increases in prices and unemployment






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






28. 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






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






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






31. Basic Keynesian economic equation






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






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






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






35. 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






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






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






38. The budget must be balanced each year






39. Money is at the root of aggregate demand






40. Fundamental equation of monetarism






41. Inflation that results from an initial increase in costs






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






43. A sudden and drastic change in the supply curve






44. _________ will prefer to consume than to save






45. Keynesian economics believes that AD is ________






46. One source of public debt






47. This consequence of national debt may lead to inflation






48. Accumulation of government deficits