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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 30 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. ______ ______ is most important in a monetarist's view for determining output - price and employment levels






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






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






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






5. Relation between inflation and unemployment






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






7. This consequence of national debt may lead to inflation






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






9. According to Keynesian theory - AS curve is __________






10. Fundamental equation of monetarism






11. A sudden and drastic change in the supply curve






12. Basic Keynesian economic equation






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






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






15. Encourage foreign investment






16. Relationship between inflation and unemployment






17. Accumulation of government deficits






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






19. Inflation accompanied by simultaneous increases in prices and unemployment






20. 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






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






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






23. Inflation that results from an initial increase in costs






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






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






26. The budget must be balanced each year






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






28. One source of public debt






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






30. _________ will prefer to consume than to save






31. Classical economists believe that the AS curve is _______






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






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






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






35. Keynesian economics believes that AD is ________






36. The price level rises and money loses value






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






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






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






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






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






42. Rational Expectations Theorists






43. 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






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






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






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






47. Money is at the root of aggregate demand






48. The competition in the marketplace provides economic stability






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