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






2. Money is at the root of aggregate demand






3. 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






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






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






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






7. This consequence of national debt may lead to inflation






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






9. Encourage foreign investment






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






11. Relationship between inflation and unemployment






12. 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






13. Relation between inflation and unemployment






14. One source of public debt






15. The competition in the marketplace provides economic stability






16. Keynesian economics believes that AD is ________






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






18. Accumulation of government deficits






19. A sudden and drastic change in the supply curve






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






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






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






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






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






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






26. Inflation that results from an initial increase in costs






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






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






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






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






31. The budget must be balanced each year






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






33. Classical economists believe that the AS curve is _______






34. Basic Keynesian economic equation






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






36. Fundamental equation of monetarism






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






38. _________ will prefer to consume than to save






39. The price level rises and money loses value






40. Rational Expectations Theorists






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






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






43. Inflation accompanied by simultaneous increases in prices and unemployment






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






45. According to Keynesian theory - AS curve is __________






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






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






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