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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. Which kind of inflation avoids some of the costs?






2. _________ will prefer to consume than to save






3. This consequence of national debt may lead to inflation






4. Keynesian economics believes that AD is ________






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






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






7. Fundamental equation of monetarism






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






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






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






11. The competition in the marketplace provides economic stability






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






13. Encourage foreign investment






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






15. Basic Keynesian economic equation






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






17. Accumulation of government deficits






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






19. The budget must be balanced each year






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






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






22. Rational Expectations Theorists






23. Relation between inflation and unemployment






24. The price level rises and money loses value






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






26. 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






27. Inflation that results from an initial increase in costs






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






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






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






31. One source of public debt






32. Inflation accompanied by simultaneous increases in prices and unemployment






33. Relationship between inflation and unemployment






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






35. 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






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






37. Classical economists believe that the AS curve is _______






38. According to Keynesian theory - AS curve is __________






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






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






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






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






43. A sudden and drastic change in the supply curve






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






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






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






47. Money is at the root of aggregate demand






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