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






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






3. Inflation accompanied by simultaneous increases in prices and unemployment






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






5. Inflation that results from an initial increase in costs






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






7. Relationship between inflation and unemployment






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






9. Fundamental equation of monetarism






10. Relation between inflation and unemployment






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






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






13. A sudden and drastic change in the supply curve






14. One source of public debt






15. 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






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






17. Basic Keynesian economic equation






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






19. The budget must be balanced each year






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






21. Keynesian economics believes that AD is ________






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






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






24. Money is at the root of aggregate demand






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






26. Encourage foreign investment






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






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






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






30. The price level rises and money loses value






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






32. Accumulation of government deficits






33. 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






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






35. The competition in the marketplace provides economic stability






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






37. According to Keynesian theory - AS curve is __________






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






39. Rational Expectations Theorists






40. This consequence of national debt may lead to inflation






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






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






43. _________ will prefer to consume than to save






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






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






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






47. Classical economists believe that the AS curve is _______






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