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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. 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






2. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






5. Basic Keynesian economic equation






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






7. According to Keynesian theory - AS curve is __________






8. This consequence of national debt may lead to inflation






9. One source of public debt






10. Money is at the root of aggregate demand






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






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






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






14. Relation between inflation and unemployment






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






16. Accumulation of government deficits






17. The competition in the marketplace provides economic stability






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






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






20. A sudden and drastic change in the supply curve






21. Rational Expectations Theorists






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






23. Fundamental equation of monetarism






24. Classical economists believe that the AS curve is _______






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






26. Encourage foreign investment






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






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






29. _________ will prefer to consume than to save






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






31. 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






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






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






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






35. Keynesian economics believes that AD is ________






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






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






38. The budget must be balanced each year






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






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






41. Relationship between inflation and unemployment






42. Inflation that results from an initial increase in costs






43. The price level rises and money loses value






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






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






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






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






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