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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. Inflation that results from an initial increase in aggregate demand






2. Relation between inflation and unemployment






3. Fundamental equation of monetarism






4. Accumulation of government deficits






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






6. Inflation that results from an initial increase in costs






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






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






9. Classical economists believe that the AS curve is _______






10. According to Keynesian theory - AS curve is __________






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






12. A sudden and drastic change in the supply curve






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






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






15. This consequence of national debt may lead to inflation






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






17. The budget must be balanced each year






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






19. Money is at the root of aggregate demand






20. Basic Keynesian economic equation






21. Encourage foreign investment






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






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






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






25. _________ will prefer to consume than to save






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






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






28. One source of public debt






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






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






31. Rational Expectations Theorists






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






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






34. Relationship between inflation and unemployment






35. 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






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






37. Keynesian economics believes that AD is ________






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. Inflation accompanied by simultaneous increases in prices and unemployment






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






41. The competition in the marketplace provides economic stability






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






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






44. The price level rises and money loses value






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






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






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






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