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






2. _________ will prefer to consume than to save






3. 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






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






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






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






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






8. Inflation that results from an initial increase in costs






9. Rational Expectations Theorists






10. Basic Keynesian economic equation






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






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






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






14. Accumulation of government deficits






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






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






17. Encourage foreign investment






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






19. Relationship between inflation and unemployment






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






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






22. Inflation accompanied by simultaneous increases in prices and unemployment






23. According to Keynesian theory - AS curve is __________






24. The price level rises and money loses value






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






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






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






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






29. This consequence of national debt may lead to inflation






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






31. Relation between inflation and unemployment






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. Money is at the root of aggregate demand






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






35. The budget must be balanced each year






36. One source of public debt






37. The competition in the marketplace provides economic stability






38. Keynesian economics believes that AD is ________






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






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






41. Fundamental equation of monetarism






42. Classical economists believe that the AS curve is _______






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






44. A sudden and drastic change in the supply curve






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






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






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






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