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






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






3. Inflation accompanied by simultaneous increases in prices and unemployment






4. Fundamental equation of monetarism






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






6. One source of public debt






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






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






9. Relation between inflation and unemployment






10. The competition in the marketplace provides economic stability






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






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






13. A sudden and drastic change in the supply curve






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






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






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






17. Keynesian economics believes that AD is ________






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






19. The price level rises and money loses value






20. 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






21. Money is at the root of aggregate demand






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






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






24. According to Keynesian theory - AS curve is __________






25. _________ will prefer to consume than to save






26. Classical economists believe that the AS curve is _______






27. The budget must be balanced each year






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






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






30. Encourage foreign investment






31. Basic Keynesian economic equation






32. Rational Expectations Theorists






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






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






35. This consequence of national debt may lead to inflation






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






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






38. Relationship between inflation and unemployment






39. Inflation that results from an initial increase in costs






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






41. Accumulation of government deficits






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






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






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






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






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






47. 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






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