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






2. Classical economists believe that the AS curve is _______






3. The budget must be balanced each year






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






5. Rational Expectations Theorists






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






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






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






9. Relation between inflation and unemployment






10. _________ will prefer to consume than to save






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






12. Relationship between inflation and unemployment






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






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






15. Inflation that results from an initial increase in costs






16. 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






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






18. This consequence of national debt may lead to inflation






19. The competition in the marketplace provides economic stability






20. Fundamental equation of monetarism






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






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






23. 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






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






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






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






27. Encourage foreign investment






28. Accumulation of government deficits






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






30. According to Keynesian theory - AS curve is __________






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






32. Keynesian economics believes that AD is ________






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






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






35. A sudden and drastic change in the supply curve






36. Money is at the root of aggregate demand






37. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






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






43. Basic Keynesian economic equation






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






45. The price level rises and money loses value






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






47. One source of public debt






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