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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
  • Answer 48 questions in 15 minutes.
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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. NCE/RET imply that the aggregate supply curve is _______

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

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

4. Fundamental equation of monetarism

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

6. The price level rises and money loses value

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

8. The budget must be balanced each year

9. Basic Keynesian economic equation

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

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

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

13. Money is at the root of aggregate demand

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

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

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

17. Inflation accompanied by simultaneous increases in prices and unemployment

18. The competition in the marketplace provides economic stability

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

20. Relationship between inflation and unemployment

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

22. Relation between inflation and unemployment

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

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

25. Keynesian economics believes that AD is ________

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

27. A sudden and drastic change in the supply curve

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

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

30. Rational Expectations Theorists

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

32. Inflation that results from an initial increase in costs

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

34. _________ will prefer to consume than to save

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

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

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

38. This consequence of national debt may lead to inflation

39. 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

40. Accumulation of government deficits

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. One source of public debt

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

44. Classical economists believe that the AS curve is _______

45. According to Keynesian theory - AS curve is __________

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

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

48. Encourage foreign investment