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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. This consequence of national debt may lead to inflation






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






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






5. Accumulation of government deficits






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






7. The competition in the marketplace provides economic stability






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






9. The budget must be balanced each year






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






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






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






13. Inflation accompanied by simultaneous increases in prices and unemployment






14. According to Keynesian theory - AS curve is __________






15. 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






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






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






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






19. Keynesian economics believes that AD is ________






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






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






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






23. Relation between inflation and unemployment






24. The price level rises and money loses value






25. _________ will prefer to consume than to save






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






27. 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






28. Classical economists believe that the AS curve is _______






29. Encourage foreign investment






30. Fundamental equation of monetarism






31. Inflation that results from an initial increase in costs






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






33. Money is at the root of aggregate demand






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






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






36. Relationship between inflation and unemployment






37. Basic Keynesian economic equation






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






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






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






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






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






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






44. Rational Expectations Theorists






45. One source of public debt






46. A sudden and drastic change in the supply curve






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






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