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






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






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






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






5. The competition in the marketplace provides economic stability






6. Classical economists believe that the AS curve is _______






7. Relationship between inflation and unemployment






8. Inflation that results from an initial increase in costs






9. 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






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






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






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






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






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






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






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






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






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






19. The price level rises and money loses value






20. Inflation accompanied by simultaneous increases in prices and unemployment






21. Keynesian economics believes that AD is ________






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






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






24. A sudden and drastic change in the supply curve






25. Fundamental equation of monetarism






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






27. Rational Expectations Theorists






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






29. One source of public debt






30. Money is at the root of aggregate demand






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






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






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






34. Basic Keynesian economic equation






35. _________ will prefer to consume than to save






36. The budget must be balanced each year






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






38. According to Keynesian theory - AS curve is __________






39. Relation between inflation and unemployment






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






41. 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






42. Accumulation of government deficits






43. This consequence of national debt may lead to inflation






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






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






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






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






48. Encourage foreign investment