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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. Rational Expectations Theorists






2. Encourage foreign investment






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






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






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






6. Basic Keynesian economic equation






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






8. Classical economists believe that the AS curve is _______






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






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






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






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






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






14. According to Keynesian theory - AS curve is __________






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






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






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






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






19. A sudden and drastic change in the supply curve






20. The budget must be balanced each year






21. _________ will prefer to consume than to save






22. 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






23. Money is at the root of aggregate demand






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






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






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






27. The competition in the marketplace provides economic stability






28. This consequence of national debt may lead to inflation






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






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






31. Relationship between inflation and unemployment






32. The price level rises and money loses value






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






34. Accumulation of government deficits






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






36. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






41. One source of public debt






42. Relation between inflation and unemployment






43. Inflation that results from an initial increase in costs






44. Keynesian economics believes that AD is ________






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






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






47. 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






48. Fundamental equation of monetarism