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






2. _________ will prefer to consume than to save






3. A sudden and drastic change in the supply curve






4. Relation between inflation and unemployment






5. Keynesian economics believes that AD is ________






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






7. 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






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






9. 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






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






11. The budget must be balanced each year






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






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






14. This consequence of national debt may lead to inflation






15. Basic Keynesian economic equation






16. Classical economists believe that the AS curve is _______






17. Accumulation of government deficits






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






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






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






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






22. Relationship between inflation and unemployment






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






24. Money is at the root of aggregate demand






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






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






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






28. According to Keynesian theory - AS curve is __________






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






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






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






32. Encourage foreign investment






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






34. One source of public debt






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






36. The price level rises and money loses value






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






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






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






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






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






42. Inflation accompanied by simultaneous increases in prices and unemployment






43. Inflation that results from an initial increase in costs






44. Fundamental equation of monetarism






45. The competition in the marketplace provides economic stability






46. Rational Expectations Theorists






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






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