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






2. Relationship between inflation and unemployment






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






4. Relation between inflation and unemployment






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






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






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






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






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






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






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






12. Inflation that results from an initial increase in costs






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






14. Money is at the root of aggregate demand






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






16. Basic Keynesian economic equation






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






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






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






20. Keynesian economics believes that AD is ________






21. Classical economists believe that the AS curve is _______






22. According to Keynesian theory - AS curve is __________






23. The budget must be balanced each year






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






25. Fundamental equation of monetarism






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






27. One source of public debt






28. Accumulation of government deficits






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






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






31. 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






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






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






34. The competition in the marketplace provides economic stability






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






36. Rational Expectations Theorists






37. The price level rises and money loses value






38. _________ will prefer to consume than to save






39. A sudden and drastic change in the supply curve






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






41. Inflation accompanied by simultaneous increases in prices and unemployment






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






43. This consequence of national debt may lead to inflation






44. Encourage foreign investment






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






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






47. 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






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