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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. Money is at the root of aggregate demand






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






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






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






5. Keynesian economics believes that AD is ________






6. The competition in the marketplace provides economic stability






7. Accumulation of government deficits






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






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






10. Rational Expectations Theorists






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






12. Fundamental equation of monetarism






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






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






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






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






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






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






19. Encourage foreign investment






20. According to Keynesian theory - AS curve is __________






21. Classical economists believe that the AS curve is _______






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






23. 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






24. Basic Keynesian economic equation






25. _________ will prefer to consume than to save






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






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






28. The budget must be balanced each year






29. Inflation that results from an initial increase in costs






30. Relation between inflation and unemployment






31. 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






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






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






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






35. Relationship between inflation and unemployment






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






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






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






39. This consequence of national debt may lead to inflation






40. One source of public debt






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






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






43. The price level rises and money loses value






44. A sudden and drastic change in the supply curve






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






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






47. Inflation accompanied by simultaneous increases in prices and unemployment






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