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






2. According to Keynesian theory - AS curve is __________






3. One source of public debt






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






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






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






7. Inflation accompanied by simultaneous increases in prices and unemployment






8. The budget must be balanced each year






9. The competition in the marketplace provides economic stability






10. Money is at the root of aggregate demand






11. Rational Expectations Theorists






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






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






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






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






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






18. Classical economists believe that the AS curve is _______






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






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






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






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






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






24. Fundamental equation of monetarism






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






26. Encourage foreign investment






27. This consequence of national debt may lead to inflation






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






29. Relation between inflation and unemployment






30. Relationship between inflation and unemployment






31. _________ will prefer to consume than to save






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






33. The price level rises and money loses value






34. Accumulation of government deficits






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






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






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






38. Keynesian economics believes that AD is ________






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






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






41. Inflation that results from an initial increase in costs






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






43. Basic Keynesian economic equation






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






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






46. A sudden and drastic change in the supply curve






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






48. 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