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






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






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






4. A sudden and drastic change in the supply curve






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






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






7. Classical economists believe that the AS curve is _______






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






9. Basic Keynesian economic equation






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






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






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






13. Fundamental equation of monetarism






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






15. Accumulation of government deficits






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






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






18. Keynesian economics believes that AD is ________






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






20. Inflation that results from an initial increase in costs






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






22. Relationship between inflation and unemployment






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






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






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






26. Inflation accompanied by simultaneous increases in prices and unemployment






27. This consequence of national debt may lead to inflation






28. Money is at the root of aggregate demand






29. The budget must be balanced each year






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






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






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. One source of public debt






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






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






36. The price level rises and money loses value






37. Encourage foreign investment






38. 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






39. According to Keynesian theory - AS curve is __________






40. _________ will prefer to consume than to save






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






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






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






44. The competition in the marketplace provides economic stability






45. Rational Expectations Theorists






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






47. Relation between inflation and unemployment






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