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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 Keynesian economists - this could pull the economy out of a recession or depression






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






3. According to Keynesian theory - AS curve is __________






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






5. Classical economists believe that the AS curve is _______






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






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






8. Relation between inflation and unemployment






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






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






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






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






13. This consequence of national debt may lead to inflation






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






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






16. Accumulation of government deficits






17. Inflation accompanied by simultaneous increases in prices and unemployment






18. Encourage foreign investment






19. Money is at the root of aggregate demand






20. The price level rises and money loses value






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






22. _________ will prefer to consume than to save






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






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






25. Relationship between inflation and unemployment






26. Inflation that results from an initial increase in costs






27. One source of public debt






28. The budget must be balanced each year






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






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






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






32. 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






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






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






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






36. Keynesian economics believes that AD is ________






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






38. The competition in the marketplace provides economic stability






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






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






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






42. Rational Expectations Theorists






43. 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






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






45. A sudden and drastic change in the supply curve






46. Fundamental equation of monetarism






47. Basic Keynesian economic equation






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