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






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






3. Inflation accompanied by simultaneous increases in prices and unemployment






4. Relationship between inflation and unemployment






5. Rational Expectations Theorists






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






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






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






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






10. Inflation that results from an initial increase in costs






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






12. Accumulation of government deficits






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






14. According to Keynesian theory - AS curve is __________






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






16. Relation between inflation and unemployment






17. Encourage foreign investment






18. One source of public debt






19. _________ will prefer to consume than to save






20. Basic Keynesian economic equation






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






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






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






24. Fundamental equation of monetarism






25. A sudden and drastic change in the supply curve






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






27. The price level rises and money loses value






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






29. 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






30. The budget must be balanced each year






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






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






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






34. This consequence of national debt may lead to inflation






35. The competition in the marketplace provides economic stability






36. Keynesian economics believes that AD is ________






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






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






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






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






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






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






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






44. Money is at the root of aggregate demand






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






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






47. Classical economists believe that the AS curve is _______






48. 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