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






2. The budget must be balanced each year






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






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






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






6. The price level rises and money loses value






7. Basic Keynesian economic equation






8. Relation between inflation and unemployment






9. One source of public debt






10. Inflation accompanied by simultaneous increases in prices and unemployment






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






12. _________ will prefer to consume than to save






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






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






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






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






17. 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






18. Money is at the root of aggregate demand






19. Rational Expectations Theorists






20. According to Keynesian theory - AS curve is __________






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






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






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






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






25. Fundamental equation of monetarism






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






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






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






29. Encourage foreign investment






30. Relationship between inflation and unemployment






31. 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






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






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






34. Inflation that results from an initial increase in costs






35. The competition in the marketplace provides economic stability






36. A sudden and drastic change in the supply curve






37. Accumulation of government deficits






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






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






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






41. Classical economists believe that the AS curve is _______






42. This consequence of national debt may lead to inflation






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






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






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






46. Keynesian economics believes that AD is ________






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






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