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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. A sudden and drastic change in the supply curve






2. This consequence of national debt may lead to inflation






3. Basic Keynesian economic equation






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






5. Accumulation of government deficits






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






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






8. One source of public debt






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






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






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






12. The budget must be balanced each year






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






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






15. Keynesian economics believes that AD is ________






16. _________ will prefer to consume than to save






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






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






19. Classical economists believe that the AS curve is _______






20. The competition in the marketplace provides economic stability






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






22. Money is at the root of aggregate demand






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






24. Inflation that results from an initial increase in costs






25. The price level rises and money loses value






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






27. Rational Expectations Theorists






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






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






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






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






32. Relationship between inflation and unemployment






33. 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






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






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






36. According to Keynesian theory - AS curve is __________






37. Encourage foreign investment






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






39. Relation between inflation and unemployment






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






41. Fundamental equation of monetarism






42. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






45. 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






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






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






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