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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. Classical economists believe that the AS curve is _______






2. Encourage foreign investment






3. Relationship between inflation and unemployment






4. _________ will prefer to consume than to save






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






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






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






8. Basic Keynesian economic equation






9. 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






10. Accumulation of government deficits






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






12. 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






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






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






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






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






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






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






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






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






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






22. Relation between inflation and unemployment






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






24. Inflation that results from an initial increase in costs






25. Inflation accompanied by simultaneous increases in prices and unemployment






26. Fundamental equation of monetarism






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






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






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






30. One source of public debt






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






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






33. This consequence of national debt may lead to inflation






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






35. Keynesian economics believes that AD is ________






36. Money is at the root of aggregate demand






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






38. A sudden and drastic change in the supply curve






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






40. Rational Expectations Theorists






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






42. The competition in the marketplace provides economic stability






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






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






45. The price level rises and money loses value






46. The budget must be balanced each year






47. According to Keynesian theory - AS curve is __________






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