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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
  • Answer 48 questions in 15 minutes.
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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 economists believe that monetary policy is a ____ tool for economic stability

2. Relationship between inflation and unemployment

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

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

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

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

7. Rational Expectations Theorists

8. Fundamental equation of monetarism

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

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

11. Keynesian economics believes that AD is ________

12. Classical economists believe that the AS curve is _______

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

14. The price level rises and money loses value

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

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

17. _________ will prefer to consume than to save

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

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

20. Encourage foreign investment

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

22. Money is at the root of aggregate demand

23. One source of public debt

24. The competition in the marketplace provides economic stability

25. This consequence of national debt may lead to inflation

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

27. Accumulation of government deficits

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

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

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

31. Inflation accompanied by simultaneous increases in prices and unemployment

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

33. 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

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

35. Inflation that results from an initial increase in costs

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

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

38. A sudden and drastic change in the supply curve

39. According to Keynesian theory - AS curve is __________

40. Basic Keynesian economic equation

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

42. 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

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

44. Relation between inflation and unemployment

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

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

47. The budget must be balanced each year

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