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






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






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






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






5. The competition in the marketplace provides economic stability






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






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






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






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






10. Basic Keynesian economic equation






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






12. This consequence of national debt may lead to inflation






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






14. The price level rises and money loses value






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






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






17. Relation between inflation and unemployment






18. Classical economists believe that the AS curve is _______






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






20. A sudden and drastic change in the supply curve






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






22. Encourage foreign investment






23. _________ will prefer to consume than to save






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






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






26. Rational Expectations Theorists






27. One source of public debt






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






29. According to Keynesian theory - AS curve is __________






30. Relationship between inflation and unemployment






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






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






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






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






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






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






37. Inflation accompanied by simultaneous increases in prices and unemployment






38. Money is at the root of aggregate demand






39. Inflation that results from an initial increase in costs






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






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






42. Keynesian economics believes that AD is ________






43. Accumulation of government deficits






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






45. Fundamental equation of monetarism






46. The budget must be balanced each year






47. 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






48. 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