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






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






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






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






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






6. Classical economists believe that the AS curve is _______






7. Encourage foreign investment






8. Fundamental equation of monetarism






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






10. This consequence of national debt may lead to inflation






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






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






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






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






15. The competition in the marketplace provides economic stability






16. One source of public debt






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






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






19. Rational Expectations Theorists






20. A sudden and drastic change in the supply curve






21. Basic Keynesian economic equation






22. Inflation that results from an initial increase in costs






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






24. Relation between inflation and unemployment






25. 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






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






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






28. 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






29. Money is at the root of aggregate demand






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






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






32. _________ will prefer to consume than to save






33. Keynesian economics believes that AD is ________






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






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






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






37. The price level rises and money loses value






38. Relationship between inflation and unemployment






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






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






41. The budget must be balanced each year






42. According to Keynesian theory - AS curve is __________






43. Inflation accompanied by simultaneous increases in prices and unemployment






44. Accumulation of government deficits






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






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






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






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