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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. Relation between inflation and unemployment






2. Rational Expectations Theorists






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






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






5. Keynesian economics believes that AD is ________






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






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






8. 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






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






10. Encourage foreign investment






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






12. A sudden and drastic change in the supply curve






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






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






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






16. Relationship between inflation and unemployment






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






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






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






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






21. Money is at the root of aggregate demand






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






23. According to Keynesian theory - AS curve is __________






24. Inflation that results from an initial increase in costs






25. This consequence of national debt may lead to inflation






26. Basic Keynesian economic equation






27. The price level rises and money loses value






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






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






30. The budget must be balanced each year






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






32. 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






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






34. Fundamental equation of monetarism






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






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






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






38. Inflation accompanied by simultaneous increases in prices and unemployment






39. Accumulation of government deficits






40. _________ will prefer to consume than to save






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






42. One source of public debt






43. Classical economists believe that the AS curve is _______






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






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






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






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






48. The competition in the marketplace provides economic stability