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






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






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






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






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






6. Keynesian economics believes that AD is ________






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






8. According to Keynesian theory - AS curve is __________






9. Encourage foreign investment






10. Money is at the root of aggregate demand






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






12. Accumulation of government deficits






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






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






15. _________ will prefer to consume than to save






16. This consequence of national debt may lead to inflation






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






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






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






20. Classical economists believe that the AS curve is _______






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






22. Relation between inflation and unemployment






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






24. The competition in the marketplace provides economic stability






25. 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






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






27. Fundamental equation of monetarism






28. A sudden and drastic change in the supply curve






29. Relationship between inflation and unemployment






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






31. 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






32. The budget must be balanced each year






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






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






35. Rational Expectations Theorists






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






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






38. The price level rises and money loses value






39. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






44. One source of public debt






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






46. Inflation that results from an initial increase in costs






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






48. Basic Keynesian economic equation