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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. Keynesian economics believes that AD is ________






2. One source of public debt






3. 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






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






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






6. According to Keynesian theory - AS curve is __________






7. Basic Keynesian economic equation






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






9. 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






10. Classical economists believe that the AS curve is _______






11. Relationship between inflation and unemployment






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






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






14. The price level rises and money loses value






15. The budget must be balanced each year






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






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






18. Money is at the root of aggregate demand






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






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






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






22. Relation between inflation and unemployment






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






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






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






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






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






28. Encourage foreign investment






29. Fundamental equation of monetarism






30. The competition in the marketplace provides economic stability






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






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






33. A sudden and drastic change in the supply curve






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






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






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






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






38. Accumulation of government deficits






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






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






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






42. Rational Expectations Theorists






43. This consequence of national debt may lead to inflation






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






45. _________ will prefer to consume than to save






46. Inflation accompanied by simultaneous increases in prices and unemployment






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






48. Inflation that results from an initial increase in costs