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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. Rational Expectations Theorists






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






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






4. According to Keynesian theory - AS curve is __________






5. Fundamental equation of monetarism






6. Accumulation of government deficits






7. Keynesian economics believes that AD is ________






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






9. This consequence of national debt may lead to inflation






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






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






12. 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






13. The price level rises and money loses value






14. _________ will prefer to consume than to save






15. Inflation that results from an initial increase in costs






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






17. A sudden and drastic change in the supply curve






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






19. Relationship between inflation and unemployment






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






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






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






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






24. The competition in the marketplace provides economic stability






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






26. Money is at the root of aggregate demand






27. Inflation accompanied by simultaneous increases in prices and unemployment






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






29. The budget must be balanced each year






30. One source of public debt






31. Classical economists believe that the AS curve is _______






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






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






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






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






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






37. Basic Keynesian economic equation






38. 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






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






40. Relation between inflation and unemployment






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






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






43. Encourage foreign investment






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






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






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






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






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