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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. A sudden and drastic change in the supply curve






2. Inflation accompanied by simultaneous increases in prices and unemployment






3. Basic Keynesian economic equation






4. 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






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






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






7. Rational Expectations Theorists






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






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






10. Accumulation of government deficits






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






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






13. Money is at the root of aggregate demand






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






15. The competition in the marketplace provides economic stability






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






17. Keynesian economics believes that AD is ________






18. Fundamental equation of monetarism






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






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






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






22. The price level rises and money loses value






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






24. Classical economists believe that the AS curve is _______






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






26. 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






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






28. Encourage foreign investment






29. According to Keynesian theory - AS curve is __________






30. One source of public debt






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






32. Relationship between inflation and unemployment






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






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






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






36. _________ will prefer to consume than to save






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






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






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






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






41. This consequence of national debt may lead to inflation






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






43. Inflation that results from an initial increase in costs






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






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






46. Relation between inflation and unemployment






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






48. The budget must be balanced each year