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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. Rational Expectations Theorists






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






4. Relation between inflation and unemployment






5. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






8. Fundamental equation of monetarism






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






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






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






12. Accumulation of government deficits






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






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






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






16. The competition in the marketplace provides economic stability






17. This consequence of national debt may lead to inflation






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






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






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






21. Keynesian economics believes that AD is ________






22. The budget must be balanced each year






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






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






25. 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






26. Classical economists believe that the AS curve is _______






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






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






29. 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






30. One source of public debt






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






32. Encourage foreign investment






33. Basic Keynesian economic equation






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






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






36. According to Keynesian theory - AS curve is __________






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






38. Inflation that results from an initial increase in costs






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






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






41. Relationship between inflation and unemployment






42. The price level rises and money loses value






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






44. _________ will prefer to consume than to save






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






46. A sudden and drastic change in the supply curve






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






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