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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. Inflation that results from an initial increase in aggregate demand






3. The competition in the marketplace provides economic stability






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






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






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






7. This consequence of national debt may lead to inflation






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






9. Basic Keynesian economic equation






10. The budget must be balanced each year






11. 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






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






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






14. _________ will prefer to consume than to save






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






16. Accumulation of government deficits






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






18. Relationship between inflation and unemployment






19. Relation between inflation and unemployment






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






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






22. Encourage foreign investment






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






24. One source of public debt






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






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






27. Inflation accompanied by simultaneous increases in prices and unemployment






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






29. Rational Expectations Theorists






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






31. Fundamental equation of monetarism






32. 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






33. A sudden and drastic change in the supply curve






34. The price level rises and money loses value






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






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






37. Classical economists believe that the AS curve is _______






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






39. According to Keynesian theory - AS curve is __________






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






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






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






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






44. Inflation that results from an initial increase in costs






45. Money is at the root of aggregate demand






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






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






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