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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. Inflation that results from an initial increase in costs






3. 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






4. Keynesian economics believes that AD is ________






5. The price level rises and money loses value






6. One source of public debt






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






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






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






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






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






12. Money is at the root of aggregate demand






13. A sudden and drastic change in the supply curve






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






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






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






17. Relation between inflation and unemployment






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






19. Fundamental equation of monetarism






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






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






22. Classical economists believe that the AS curve is _______






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






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






25. _________ will prefer to consume than to save






26. The competition in the marketplace provides economic stability






27. Inflation accompanied by simultaneous increases in prices and unemployment






28. Rational Expectations Theorists






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






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






31. Accumulation of government deficits






32. Encourage foreign investment






33. Basic Keynesian economic equation






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






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






36. The budget must be balanced each year






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






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






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






40. 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






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






42. According to Keynesian theory - AS curve is __________






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






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






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






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






47. Relationship between inflation and unemployment






48. This consequence of national debt may lead to inflation