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






4. One source of public debt






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






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






7. According to Keynesian theory - AS curve is __________






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






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






10. Money is at the root of aggregate demand






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






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






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






14. Inflation that results from an initial increase in costs






15. Inflation accompanied by simultaneous increases in prices and unemployment






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






17. The competition in the marketplace provides economic stability






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






19. This consequence of national debt may lead to inflation






20. Encourage foreign investment






21. 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






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






23. The price level rises and money loses value






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






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






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






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






28. The budget must be balanced each year






29. 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






30. Fundamental equation of monetarism






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






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






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






34. Basic Keynesian economic equation






35. Keynesian economics believes that AD is ________






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






37. _________ will prefer to consume than to save






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






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






40. Accumulation of government deficits






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






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






43. A sudden and drastic change in the supply curve






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






45. Classical economists believe that the AS curve is _______






46. Relationship between inflation and unemployment






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






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