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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. Basic Keynesian economic equation






3. Rational Expectations Theorists






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






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






6. Inflation accompanied by simultaneous increases in prices and unemployment






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






8. A sudden and drastic change in the supply curve






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






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






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






12. The price level rises and money loses value






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






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






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






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






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






18. Classical economists believe that the AS curve is _______






19. Relation between inflation and unemployment






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






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






22. According to Keynesian theory - AS curve is __________






23. The budget must be balanced each year






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






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






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






27. 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






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






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






30. Relationship between inflation and unemployment






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






32. Accumulation of government deficits






33. Fundamental equation of monetarism






34. Money is at the root of aggregate demand






35. Keynesian economics believes that AD is ________






36. Encourage foreign investment






37. One source of public debt






38. Inflation that results from an initial increase in costs






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






40. _________ will prefer to consume than to save






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






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






43. 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






44. The competition in the marketplace provides economic stability






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






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






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






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