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






3. 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






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






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






6. Relationship between inflation and unemployment






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






8. Accumulation of government deficits






9. Keynesian economics believes that AD is ________






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






11. Basic Keynesian economic equation






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






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






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






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






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






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






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






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






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






21. Money is at the root of aggregate demand






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






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






24. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






27. One source of public debt






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






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






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






31. This consequence of national debt may lead to inflation






32. _________ will prefer to consume than to save






33. Encourage foreign investment






34. 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






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






36. Rational Expectations Theorists






37. The price level rises and money loses value






38. Inflation that results from an initial increase in costs






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






40. The competition in the marketplace provides economic stability






41. A sudden and drastic change in the supply curve






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






43. Classical economists believe that the AS curve is _______






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






45. Fundamental equation of monetarism






46. According to Keynesian theory - AS curve is __________






47. The budget must be balanced each year






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