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






2. This consequence of national debt may lead to inflation






3. The budget must be balanced each year






4. Money is at the root of aggregate demand






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






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






7. A sudden and drastic change in the supply curve






8. 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






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






10. Relationship between inflation and unemployment






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






12. Basic Keynesian economic equation






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






14. Rational Expectations Theorists






15. Relation between inflation and unemployment






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






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






18. Inflation that results from an initial increase in costs






19. Accumulation of government deficits






20. The competition in the marketplace provides economic stability






21. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






24. Fundamental equation of monetarism






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






26. _________ will prefer to consume than to save






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






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






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






30. One source of public debt






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






32. 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






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






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






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






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






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






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






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






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






41. According to Keynesian theory - AS curve is __________






42. Keynesian economics believes that AD is ________






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






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






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






46. Encourage foreign investment






47. Classical economists believe that the AS curve is _______






48. The price level rises and money loses value