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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 theory - AS curve is __________






2. Relation between inflation and unemployment






3. Encourage foreign investment






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






5. Classical economists believe that the AS curve is _______






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






7. Accumulation of government deficits






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






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






10. Relationship between inflation and unemployment






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






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






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






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






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






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






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






18. Fundamental equation of monetarism






19. The budget must be balanced each year






20. This consequence of national debt may lead to inflation






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






22. The price level rises and money loses value






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






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






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






26. Rational Expectations Theorists






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






28. Keynesian economics believes that AD is ________






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






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






31. 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






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






33. One source of public debt






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






35. Basic Keynesian economic equation






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






37. _________ will prefer to consume than to save






38. 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






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






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






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






42. Inflation accompanied by simultaneous increases in prices and unemployment






43. A sudden and drastic change in the supply curve






44. Inflation that results from an initial increase in costs






45. Money is at the root of aggregate demand






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






47. The competition in the marketplace provides economic stability






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