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






2. 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






3. Accumulation of government deficits






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






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






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






7. One source of public debt






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






9. Relationship between inflation and unemployment






10. The competition in the marketplace provides economic stability






11. 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






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






13. Encourage foreign investment






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






15. Keynesian economics believes that AD is ________






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






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






18. Money is at the root of aggregate demand






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






20. According to Keynesian theory - AS curve is __________






21. Inflation accompanied by simultaneous increases in prices and unemployment






22. Basic Keynesian economic equation






23. Rational Expectations Theorists






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






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






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






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






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






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






30. Inflation that results from an initial increase in costs






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






32. Classical economists believe that the AS curve is _______






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






34. Relation between inflation and unemployment






35. The budget must be balanced each year






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






37. The price level rises and money loses value






38. Fundamental equation of monetarism






39. _________ will prefer to consume than to save






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






41. This consequence of national debt may lead to inflation






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






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






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






45. A sudden and drastic change in the supply curve






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






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






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