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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. _________ will prefer to consume than to save






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






4. According to Keynesian theory - AS curve is __________






5. Rational Expectations Theorists






6. Encourage foreign investment






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






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






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






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






11. Inflation accompanied by simultaneous increases in prices and unemployment






12. This consequence of national debt may lead to inflation






13. 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






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






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






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






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






18. The budget must be balanced each year






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






20. A sudden and drastic change in the supply curve






21. 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






22. Classical economists believe that the AS curve is _______






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






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






25. Basic Keynesian economic equation






26. The competition in the marketplace provides economic stability






27. Money is at the root of aggregate demand






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






29. Relation between inflation and unemployment






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






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






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






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






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






35. Accumulation of government deficits






36. Inflation that results from an initial increase in costs






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






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






39. Relationship between inflation and unemployment






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






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






42. The price level rises and money loses value






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






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






45. One source of public debt






46. Fundamental equation of monetarism






47. Keynesian economics believes that AD is ________






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