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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
  • Answer 48 questions in 15 minutes.
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  • Match each statement with the correct term.
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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 economy may stagnate in the absence of proper work - saving and investment incentives

2. The price level rises and money loses value

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

4. One source of public debt

5. This consequence of national debt may lead to inflation

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

7. Money is at the root of aggregate demand

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

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

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

11. Fundamental equation of monetarism

12. Encourage foreign investment

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

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

15. Rational Expectations Theorists

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

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

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

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

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

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

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

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

24. The budget must be balanced each year

25. Inflation that results from an initial increase in costs

26. Basic Keynesian economic equation

27. 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

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

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

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

31. 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

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

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

34. A sudden and drastic change in the supply curve

35. Relationship between inflation and unemployment

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

37. The competition in the marketplace provides economic stability

38. _________ will prefer to consume than to save

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

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

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

42. Keynesian economics believes that AD is ________

43. Inflation accompanied by simultaneous increases in prices and unemployment

44. Accumulation of government deficits

45. According to Keynesian theory - AS curve is __________

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

47. Relation between inflation and unemployment

48. Classical economists believe that the AS curve is _______