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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. 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






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






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






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






5. Accumulation of government deficits






6. Encourage foreign investment






7. Relationship between inflation and unemployment






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






9. _________ will prefer to consume than to save






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






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






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






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






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






15. The budget must be balanced each year






16. The price level rises and money loses value






17. The competition in the marketplace provides economic stability






18. Relation between inflation and unemployment






19. 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






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






21. Basic Keynesian economic equation






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






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






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






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






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






27. Rational Expectations Theorists






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






29. Keynesian economics believes that AD is ________






30. A sudden and drastic change in the supply curve






31. Fundamental equation of monetarism






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






33. According to Keynesian theory - AS curve is __________






34. This consequence of national debt may lead to inflation






35. Classical economists believe that the AS curve is _______






36. Inflation accompanied by simultaneous increases in prices and unemployment






37. Inflation that results from an initial increase in costs






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






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






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






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






42. One source of public debt






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






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






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






48. Money is at the root of aggregate demand