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






2. This consequence of national debt may lead to inflation






3. The competition in the marketplace provides economic stability






4. Money is at the root of aggregate demand






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






6. 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






7. Encourage foreign investment






8. One source of public debt






9. 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






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






11. The budget must be balanced each year






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






13. Relationship between inflation and unemployment






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






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






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






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






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






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






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






21. The price level rises and money loses value






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






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






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






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






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






27. Inflation accompanied by simultaneous increases in prices and unemployment






28. A sudden and drastic change in the supply curve






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






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






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






32. According to Keynesian theory - AS curve is __________






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






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






35. Accumulation of government deficits






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






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






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






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






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






41. Classical economists believe that the AS curve is _______






42. Basic Keynesian economic equation






43. Rational Expectations Theorists






44. _________ will prefer to consume than to save






45. Relation between inflation and unemployment






46. Fundamental equation of monetarism






47. Inflation that results from an initial increase in costs






48. Keynesian economics believes that AD is ________