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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. This consequence of national debt may lead to inflation






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






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






4. Fundamental equation of monetarism






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






6. Encourage foreign investment






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






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






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






10. Classical economists believe that the AS curve is _______






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






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






13. The competition in the marketplace provides economic stability






14. 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






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






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






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






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






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






20. The budget must be balanced each year






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






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






23. Inflation accompanied by simultaneous increases in prices and unemployment






24. Inflation that results from an initial increase in costs






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






26. Relationship between inflation and unemployment






27. Accumulation of government deficits






28. One source of public debt






29. The price level rises and money loses value






30. _________ will prefer to consume than to save






31. Money is at the root of aggregate demand






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






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






34. Basic Keynesian economic equation






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






36. Keynesian economics believes that AD is ________






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






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






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






40. A sudden and drastic change in the supply curve






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






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






43. 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






44. According to Keynesian theory - AS curve is __________






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






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






47. Rational Expectations Theorists






48. Relation between inflation and unemployment







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