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






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






3. According to Keynesian theory - AS curve is __________






4. The price level rises and money loses value






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






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






7. 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






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






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






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






11. Encourage foreign investment






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






13. This consequence of national debt may lead to inflation






14. Inflation that results from an initial increase in costs






15. The budget must be balanced each year






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






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






18. Keynesian economics believes that AD is ________






19. Basic Keynesian economic equation






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






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






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






23. Rational Expectations Theorists






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






25. 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






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






27. Accumulation of government deficits






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






29. Relationship between inflation and unemployment






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






31. Inflation accompanied by simultaneous increases in prices and unemployment






32. Fundamental equation of monetarism






33. One source of public debt






34. The competition in the marketplace provides economic stability






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






36. Relation between inflation and unemployment






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






38. Money is at the root of aggregate demand






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






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






41. _________ will prefer to consume than to save






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






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






44. Classical economists believe that the AS curve is _______






45. A sudden and drastic change in the supply curve






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






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






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