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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 30 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. Taxes and transfer payments that stabilize GDP without requiring policymakers to take explicit actions






3. This consequence of national debt may lead to inflation






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






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






6. Inflation that results from an initial increase in costs






7. _________ will prefer to consume than to save






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






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






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






11. Classical economists believe that the AS curve is _______






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






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






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






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






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






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. Basic Keynesian economic equation






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






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






21. Money is at the root of aggregate demand






22. Encourage foreign investment






23. Relation between inflation and unemployment






24. Rational Expectations Theorists






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






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






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






28. Inflation accompanied by simultaneous increases in prices and unemployment






29. Accumulation of government deficits






30. The budget must be balanced each year






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






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






33. Fundamental equation of monetarism






34. According to Keynesian theory - AS curve is __________






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






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






37. Keynesian economics believes that AD is ________






38. The competition in the marketplace provides economic stability






39. 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






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






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






42. The price level rises and money loses value






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






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






45. Relationship between inflation and unemployment






46. A sudden and drastic change in the supply curve






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






48. One source of public debt