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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. Rational Expectations Theorists






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






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






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






6. 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






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






8. Accumulation of government deficits






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






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






11. Encourage foreign investment






12. Basic Keynesian economic equation






13. 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






14. According to Keynesian theory - AS curve is __________






15. Inflation that results from an initial increase in costs






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






17. Keynesian economics believes that AD is ________






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






19. Relation between inflation and unemployment






20. Fundamental equation of monetarism






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






22. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






25. _________ will prefer to consume than to save






26. Money is at the root of aggregate demand






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






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






29. Relationship between inflation and unemployment






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






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






32. The budget must be balanced each year






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






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






35. Classical economists believe that the AS curve is _______






36. A sudden and drastic change in the supply curve






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






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






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






40. The competition in the marketplace provides economic stability






41. The price level rises and money loses value






42. One source of public debt






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






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






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






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






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






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