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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 consequence of national debt may lead to inflation






2. One source of public debt






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






4. Rational Expectations Theorists






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






6. Money is at the root of aggregate demand






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






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






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






10. Encourage foreign investment






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






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






13. _________ will prefer to consume than to save






14. Relationship between inflation and unemployment






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






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






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






18. Relation between inflation and unemployment






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






20. Classical economists believe that the AS curve is _______






21. 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






22. Basic Keynesian economic equation






23. According to Keynesian theory - AS curve is __________






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






25. A sudden and drastic change in the supply curve






26. Accumulation of government deficits






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






28. 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






29. Fundamental equation of monetarism






30. Inflation that results from an initial increase in costs






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






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






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






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






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






36. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






39. The price level rises and money loses value






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






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






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






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






44. The competition in the marketplace provides economic stability






45. The budget must be balanced each year






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






47. Keynesian economics believes that AD is ________






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