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






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






3. Relationship between inflation and unemployment






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






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






6. _________ will prefer to consume than to save






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






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






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






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






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






12. According to Keynesian theory - AS curve is __________






13. This consequence of national debt may lead to inflation






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






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






16. Classical economists believe that the AS curve is _______






17. Rational Expectations Theorists






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






19. One source of public debt






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






21. 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






22. Relation between inflation and unemployment






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






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






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






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






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






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






29. Encourage foreign investment






30. The price level rises and money loses value






31. Basic Keynesian economic equation






32. 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






33. Fundamental equation of monetarism






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






35. The competition in the marketplace provides economic stability






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






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






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






39. Keynesian economics believes that AD is ________






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






41. Inflation that results from an initial increase in costs






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






43. The budget must be balanced each year






44. Accumulation of government deficits






45. Money is at the root of aggregate demand






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






47. A sudden and drastic change in the supply curve






48. Inflation accompanied by simultaneous increases in prices and unemployment