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






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






3. Relation between inflation and unemployment






4. A sudden and drastic change in the supply curve






5. According to Keynesian theory - AS curve is __________






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






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






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






9. 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






10. 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






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






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






13. Money is at the root of aggregate demand






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






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






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






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






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






19. Rational Expectations Theorists






20. Accumulation of government deficits






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






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






23. Relationship between inflation and unemployment






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






25. Classical economists believe that the AS curve is _______






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






27. Inflation accompanied by simultaneous increases in prices and unemployment






28. Basic Keynesian economic equation






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






30. One source of public debt






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






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






33. The competition in the marketplace provides economic stability






34. _________ will prefer to consume than to save






35. This consequence of national debt may lead to inflation






36. The budget must be balanced each year






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






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






39. Inflation that results from an initial increase in costs






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






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






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






43. Encourage foreign investment






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






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






46. Fundamental equation of monetarism






47. The price level rises and money loses value






48. Keynesian economics believes that AD is ________