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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. Inflation that results from an initial increase in costs






2. This consequence of national debt may lead to inflation






3. Accumulation of government deficits






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






5. The budget must be balanced each year






6. One source of public debt






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






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






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






10. Relationship between inflation and unemployment






11. Relation between inflation and unemployment






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






13. Inflation accompanied by simultaneous increases in prices and unemployment






14. 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






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






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






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






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






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






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






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






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






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






24. Rational Expectations Theorists






25. A sudden and drastic change in the supply curve






26. The competition in the marketplace provides economic stability






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






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






30. Fundamental equation of monetarism






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






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






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






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






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






36. Keynesian economics believes that AD is ________






37. Basic Keynesian economic equation






38. _________ will prefer to consume than to save






39. According to Keynesian theory - AS curve is __________






40. The price level rises and money loses value






41. Money is at the root of aggregate demand






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






43. Classical economists believe that the AS curve is _______






44. Encourage foreign investment






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






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






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






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