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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. According to Keynesian theory - AS curve is __________






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






3. The competition in the marketplace provides economic stability






4. Keynesian economics believes that AD is ________






5. 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






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






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






8. A sudden and drastic change in the supply curve






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






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






11. 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






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






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






14. Inflation accompanied by simultaneous increases in prices and unemployment






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






16. This consequence of national debt may lead to inflation






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






18. _________ will prefer to consume than to save






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






20. Fundamental equation of monetarism






21. Inflation that results from an initial increase in costs






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






23. The budget must be balanced each year






24. Encourage foreign investment






25. Classical economists believe that the AS curve is _______






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






27. One source of public debt






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






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






30. Rational Expectations Theorists






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






32. Accumulation of government deficits






33. Money is at the root of aggregate demand






34. Basic Keynesian economic equation






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






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






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






38. Relation between inflation and unemployment






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






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






41. The price level rises and money loses value






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






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






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






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






46. Relationship between inflation and unemployment






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






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