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






2. Relationship between inflation and unemployment






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






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






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






6. Money is at the root of aggregate demand






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






8. Encourage foreign investment






9. The competition in the marketplace provides economic stability






10. Keynesian economics believes that AD is ________






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






12. Rational Expectations Theorists






13. According to Keynesian theory - AS curve is __________






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






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






16. 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






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






18. Inflation that results from an initial increase in costs






19. The price level rises and money loses value






20. Basic Keynesian economic equation






21. _________ will prefer to consume than to save






22. This consequence of national debt may lead to inflation






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






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






25. Accumulation of government deficits






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






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






28. Inflation accompanied by simultaneous increases in prices and unemployment






29. The budget must be balanced each year






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






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






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






33. Classical economists believe that the AS curve is _______






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






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






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






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






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






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






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






41. Relation between inflation and unemployment






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






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






44. Fundamental equation of monetarism






45. One source of public debt






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






47. 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






48. A sudden and drastic change in the supply curve