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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 competition in the marketplace provides economic stability






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






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






4. A sudden and drastic change in the supply curve






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






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






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






8. This consequence of national debt may lead to inflation






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






10. Rational Expectations Theorists






11. Accumulation of government deficits






12. One source of public debt






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






14. Keynesian economics believes that AD is ________






15. Basic Keynesian economic equation






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






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






18. 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






19. According to Keynesian theory - AS curve is __________






20. Inflation that results from an initial increase in costs






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






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






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






24. Classical economists believe that the AS curve is _______






25. The price level rises and money loses value






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






27. Relation between inflation and unemployment






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






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






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






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






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






33. Inflation accompanied by simultaneous increases in prices and unemployment






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






35. 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






36. _________ will prefer to consume than to save






37. Relationship between inflation and unemployment






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






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






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






41. Money is at the root of aggregate demand






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






43. The budget must be balanced each year






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






45. Fundamental equation of monetarism






46. Encourage foreign investment






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






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