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






2. Keynesian economics believes that AD is ________






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






4. One source of public debt






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






6. According to Keynesian theory - AS curve is __________






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






8. Inflation accompanied by simultaneous increases in prices and unemployment






9. The price level rises and money loses value






10. 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






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






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






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






14. Relation between inflation and unemployment






15. This consequence of national debt may lead to inflation






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






17. The competition in the marketplace provides economic stability






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






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






20. A sudden and drastic change in the supply curve






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






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






23. Relationship between inflation and unemployment






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






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






26. Classical economists believe that the AS curve is _______






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






28. Rational Expectations Theorists






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






30. The budget must be balanced each year






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






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






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






34. Encourage foreign investment






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






36. _________ will prefer to consume than to save






37. 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






38. Basic Keynesian economic equation






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






40. Accumulation of government deficits






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






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






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






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






45. Money is at the root of aggregate demand






46. Fundamental equation of monetarism






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






48. Inflation that results from an initial increase in costs