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






2. Relation between inflation and unemployment






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






4. Fundamental equation of monetarism






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






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






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






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






9. Rational Expectations Theorists






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






11. Money is at the root of aggregate demand






12. Inflation accompanied by simultaneous increases in prices and unemployment






13. According to Keynesian theory - AS curve is __________






14. _________ will prefer to consume than to save






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






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






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






18. Relationship between inflation and unemployment






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






20. The price level rises and money loses value






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






22. Encourage foreign investment






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






24. A sudden and drastic change in the supply curve






25. Inflation that results from an initial increase in costs






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






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






28. One source of public debt






29. Keynesian economics believes that AD is ________






30. The budget must be balanced each year






31. This consequence of national debt may lead to inflation






32. Accumulation of government deficits






33. The competition in the marketplace provides economic stability






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






35. Classical economists believe that the AS curve is _______






36. 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






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






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






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






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






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






42. 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






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






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






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






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






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






48. Basic Keynesian economic equation