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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. One source of public debt






3. The price level rises and money loses value






4. Money is at the root of aggregate demand






5. Classical economists believe that the AS curve is _______






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






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






8. Inflation that results from an initial increase in costs






9. Inflation accompanied by simultaneous increases in prices and unemployment






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






11. 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






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






13. Rational Expectations Theorists






14. The competition in the marketplace provides economic stability






15. Basic Keynesian economic equation






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






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






18. According to Keynesian theory - AS curve is __________






19. This consequence of national debt may lead to inflation






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






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






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






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






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






25. 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






26. Fundamental equation of monetarism






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






28. A sudden and drastic change in the supply curve






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






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






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






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






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






34. Relation between inflation and unemployment






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






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






37. Encourage foreign investment






38. The budget must be balanced each year






39. _________ will prefer to consume than to save






40. Accumulation of government deficits






41. Keynesian economics believes that AD is ________






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






43. Relationship between inflation and unemployment






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






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






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






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






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