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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 competition in the marketplace provides economic stability






2. This consequence of national debt may lead to inflation






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






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






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






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






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






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






9. Inflation that results from an initial increase in costs






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






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






12. Rational Expectations Theorists






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






14. Classical economists believe that the AS curve is _______






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






16. Keynesian economics believes that AD is ________






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






18. 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






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






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






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






22. Basic Keynesian economic equation






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






24. According to Keynesian theory - AS curve is __________






25. _________ will prefer to consume than to save






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






27. Relationship between inflation and unemployment






28. Accumulation of government deficits






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






30. The price level rises and money loses value






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






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






33. Inflation accompanied by simultaneous increases in prices and unemployment






34. Relation between inflation and unemployment






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






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






37. Encourage foreign investment






38. Money is at the root of aggregate demand






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






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






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






42. A sudden and drastic change in the supply curve






43. 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






44. One source of public debt






45. The budget must be balanced each year






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






47. Fundamental equation of monetarism






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