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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. Which kind of inflation avoids some of the costs?






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






3. The budget must be balanced each year






4. 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






5. The price level rises and money loses value






6. Relationship between inflation and unemployment






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






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






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






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






11. A sudden and drastic change in the supply curve






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






13. Money is at the root of aggregate demand






14. This consequence of national debt may lead to inflation






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






16. Inflation accompanied by simultaneous increases in prices and unemployment






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






18. Rational Expectations Theorists






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






20. 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






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






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






23. _________ will prefer to consume than to save






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






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






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






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






28. Accumulation of government deficits






29. Encourage foreign investment






30. According to Keynesian theory - AS curve is __________






31. One source of public debt






32. Basic Keynesian economic equation






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






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






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






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






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






38. Relation between inflation and unemployment






39. Inflation that results from an initial increase in costs






40. The competition in the marketplace provides economic stability






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






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






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






44. Keynesian economics believes that AD is ________






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






46. Classical economists believe that the AS curve is _______






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






48. Fundamental equation of monetarism