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






2. Encourage foreign investment






3. 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






4. Rational Expectations Theorists






5. _________ will prefer to consume than to save






6. 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






7. Keynesian economics believes that AD is ________






8. This consequence of national debt may lead to inflation






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






10. Money is at the root of aggregate demand






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






12. The competition in the marketplace provides economic stability






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






14. A sudden and drastic change in the supply curve






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






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






17. Fundamental equation of monetarism






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






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






20. According to Keynesian theory - AS curve is __________






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






22. Accumulation of government deficits






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






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






25. The budget must be balanced each year






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






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






28. Relationship between inflation and unemployment






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






30. Inflation that results from an initial increase in costs






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






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






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






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






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






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






37. The price level rises and money loses value






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






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






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






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






42. Relation between inflation and unemployment






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






44. Basic Keynesian economic equation






45. Inflation accompanied by simultaneous increases in prices and unemployment






46. One source of public debt






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






48. Classical economists believe that the AS curve is _______