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






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






3. A sudden and drastic change in the supply curve






4. Inflation that results from an initial increase in costs






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






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






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






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






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






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






11. Rational Expectations Theorists






12. Relationship between inflation and unemployment






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






14. 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






15. 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






16. Classical economists believe that the AS curve is _______






17. One source of public debt






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






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






20. Relation between inflation and unemployment






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






22. Basic Keynesian economic equation






23. Keynesian economics believes that AD is ________






24. Accumulation of government deficits






25. Fundamental equation of monetarism






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






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






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






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






30. _________ will prefer to consume than to save






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






32. This consequence of national debt may lead to inflation






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






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






35. Encourage foreign investment






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






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






38. The budget must be balanced each year






39. The competition in the marketplace provides economic stability






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






41. Inflation accompanied by simultaneous increases in prices and unemployment






42. The price level rises and money loses value






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






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






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






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






47. Money is at the root of aggregate demand






48. According to Keynesian theory - AS curve is __________