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






2. Basic Keynesian economic equation






3. Accumulation of government deficits






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






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






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






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






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






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






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






11. Rational Expectations Theorists






12. Inflation accompanied by simultaneous increases in prices and unemployment






13. _________ will prefer to consume than to save






14. This consequence of national debt may lead to inflation






15. Inflation that results from an initial increase in costs






16. 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






17. One source of public debt






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






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






20. Money is at the root of aggregate demand






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






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






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






24. Keynesian economics believes that AD is ________






25. Fundamental equation of monetarism






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






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






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






29. Classical economists believe that the AS curve is _______






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






31. Relation between inflation and unemployment






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






33. A sudden and drastic change in the supply curve






34. Encourage foreign investment






35. 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






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






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






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






39. According to Keynesian theory - AS curve is __________






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






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






42. The budget must be balanced each year






43. The competition in the marketplace provides economic stability






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






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






46. Relationship between inflation and unemployment






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






48. The price level rises and money loses value