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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. Accumulation of government deficits






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






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






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






5. Keynesian economics believes that AD is ________






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






7. Fundamental equation of monetarism






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






9. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






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






15. The budget must be balanced each year






16. Money is at the root of aggregate demand






17. 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






18. According to Keynesian theory - AS curve is __________






19. Basic Keynesian economic equation






20. This consequence of national debt may lead to inflation






21. The price level rises and money loses value






22. _________ will prefer to consume than to save






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






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






25. Relationship between inflation and unemployment






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






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






28. Relation between inflation and unemployment






29. Classical economists believe that the AS curve is _______






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






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






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






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






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






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






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






37. Rational Expectations Theorists






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






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






40. Inflation that results from an initial increase in costs






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






42. The competition in the marketplace provides economic stability






43. Encourage foreign investment






44. A sudden and drastic change in the supply curve






45. One source of public debt






46. 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






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






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







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