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






2. Accumulation of government deficits






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






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






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






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






7. The price level rises and money loses value






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






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






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






11. Encourage foreign investment






12. One source of public debt






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






14. Basic Keynesian economic equation






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






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






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






18. Money is at the root of aggregate demand






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






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






21. Relation between inflation and unemployment






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






23. 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






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






25. The competition in the marketplace provides economic stability






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






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






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






29. Relationship between inflation and unemployment






30. Classical economists believe that the AS curve is _______






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






32. 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






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






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






35. Fundamental equation of monetarism






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






37. According to Keynesian theory - AS curve is __________






38. _________ will prefer to consume than to save






39. A sudden and drastic change in the supply curve






40. This consequence of national debt may lead to inflation






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






42. Inflation accompanied by simultaneous increases in prices and unemployment






43. Keynesian economics believes that AD is ________






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






45. Rational Expectations Theorists






46. The budget must be balanced each year






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






48. Inflation that results from an initial increase in costs