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






3. _________ will prefer to consume than to save






4. Money is at the root of aggregate demand






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






6. The competition in the marketplace provides economic stability






7. Accumulation of government deficits






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






9. This consequence of national debt may lead to inflation






10. One source of public debt






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






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






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






14. Rational Expectations Theorists






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






16. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






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






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






23. Inflation that results from an initial increase in costs






24. Relationship between inflation and unemployment






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






26. Encourage foreign investment






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






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






29. The budget must be balanced each year






30. Fundamental equation of monetarism






31. The price level rises and money loses value






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






33. A sudden and drastic change in the supply curve






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






35. Relation between inflation and unemployment






36. 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






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






38. 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






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






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






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






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






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






46. Keynesian economics believes that AD is ________






47. According to Keynesian theory - AS curve is __________






48. Basic Keynesian economic equation