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






2. This consequence of national debt may lead to inflation






3. Basic Keynesian economic equation






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






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






6. Relationship between inflation and unemployment






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






8. The price level rises and money loses value






9. Rational Expectations Theorists






10. According to Keynesian theory - AS curve is __________






11. _________ will prefer to consume than to save






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






13. Classical economists believe that the AS curve is _______






14. 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






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






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






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






18. A sudden and drastic change in the supply curve






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






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






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






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






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






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






25. Fundamental equation of monetarism






26. The competition in the marketplace provides economic stability






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






28. 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






29. Relation between inflation and unemployment






30. Inflation that results from an initial increase in costs






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






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






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






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






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






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






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






38. The budget must be balanced each year






39. One source of public debt






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






41. Money is at the root of aggregate demand






42. Accumulation of government deficits






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






44. Inflation accompanied by simultaneous increases in prices and unemployment






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






46. Keynesian economics believes that AD is ________






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






48. Encourage foreign investment