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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. Relationship between inflation and unemployment






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






3. 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






4. According to Keynesian theory - AS curve is __________






5. Fundamental equation of monetarism






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






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






8. Relation between inflation and unemployment






9. Inflation accompanied by simultaneous increases in prices and unemployment






10. One source of public debt






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






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






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






14. The competition in the marketplace provides economic stability






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






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






17. 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






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






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






20. Accumulation of government deficits






21. This consequence of national debt may lead to inflation






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






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






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






25. Keynesian economics believes that AD is ________






26. Money is at the root of aggregate demand






27. Basic Keynesian economic equation






28. A sudden and drastic change in the supply curve






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






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






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






32. The budget must be balanced each year






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






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






35. Classical economists believe that the AS curve is _______






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






37. Rational Expectations Theorists






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






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






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






41. Encourage foreign investment






42. The price level rises and money loses value






43. _________ will prefer to consume than to save






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






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






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






47. Inflation that results from an initial increase in costs






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