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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. Fundamental equation of monetarism






2. A sudden and drastic change in the supply curve






3. Inflation that results from an initial increase in costs






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






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






6. One source of public debt






7. The price level rises and money loses value






8. Encourage foreign investment






9. _________ will prefer to consume than to save






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






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






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






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






14. 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






15. Accumulation of government deficits






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






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






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






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






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






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






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






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






24. Inflation accompanied by simultaneous increases in prices and unemployment






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






26. Relationship between inflation and unemployment






27. This consequence of national debt may lead to inflation






28. Rational Expectations Theorists






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






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






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






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






33. According to Keynesian theory - AS curve is __________






34. Keynesian economics believes that AD is ________






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






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






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






38. Basic Keynesian economic equation






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






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






41. Money is at the root of aggregate demand






42. Relation between inflation and unemployment






43. The budget must be balanced each year






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. The competition in the marketplace provides economic stability






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






47. Classical economists believe that the AS curve is _______






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