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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 30 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. In the short-run prices and wages are downwardly inflexible






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






3. Relation between inflation and unemployment






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






5. The budget must be balanced each year






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






7. Accumulation of government deficits






8. According to Keynesian theory - AS curve is __________






9. One source of public debt






10. Inflation accompanied by simultaneous increases in prices and unemployment






11. This consequence of national debt may lead to inflation






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






13. 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






14. _________ will prefer to consume than to save






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






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






17. The price level rises and money loses value






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






19. A sudden and drastic change in the supply curve






20. Classical economists believe that the AS curve is _______






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






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






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






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






25. Keynesian economics believes that AD is ________






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






27. Relationship between inflation and unemployment






28. Rational Expectations Theorists






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






30. Inflation that results from an initial increase in costs






31. Basic Keynesian economic equation






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






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






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






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






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






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






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






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






40. Encourage foreign investment






41. The competition in the marketplace provides economic stability






42. Money is at the root of aggregate demand






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






44. 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






45. Fundamental equation of monetarism






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






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






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