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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. Fundamental equation of monetarism






2. The price level rises and money loses value






3. One source of public debt






4. Classical economists believe that the AS curve is _______






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






6. Accumulation of government deficits






7. Relationship between inflation and unemployment






8. Rational Expectations Theorists






9. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






13. According to Keynesian theory - AS curve is __________






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






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






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






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






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






20. Encourage foreign investment






21. Basic Keynesian economic equation






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






23. _________ will prefer to consume than to save






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






25. 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






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






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






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






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






30. A sudden and drastic change in the supply curve






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






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






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






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






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






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






37. Relation between inflation and unemployment






38. The budget must be balanced each year






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






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






41. Keynesian economics believes that AD is ________






42. Inflation that results from an initial increase in costs






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






44. The competition in the marketplace provides economic stability






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






46. This consequence of national debt may lead to inflation






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






48. Money is at the root of aggregate demand