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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. The budget must be balanced each year






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






3. Basic Keynesian economic equation






4. Keynesian economics believes that AD is ________






5. Money is at the root of aggregate demand






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






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






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






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






10. The competition in the marketplace provides economic stability






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






12. The price level rises and money loses value






13. 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






14. Relation between inflation and unemployment






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






16. _________ will prefer to consume than to save






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






18. According to Keynesian theory - AS curve is __________






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






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






21. Rational Expectations Theorists






22. One source of public debt






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






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






26. This consequence of national debt may lead to inflation






27. Accumulation of government deficits






28. Inflation accompanied by simultaneous increases in prices and unemployment






29. Inflation that results from an initial increase in costs






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






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






32. Relationship between inflation and unemployment






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






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






35. A sudden and drastic change in the supply curve






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






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






38. Encourage foreign investment






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






40. Fundamental equation of monetarism






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






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






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






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






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






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






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






48. Classical economists believe that the AS curve is _______