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






2. Accumulation of government deficits






3. One source of public debt






4. Money is at the root of aggregate demand






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






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






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






8. The price level rises and money loses value






9. The competition in the marketplace provides economic stability






10. Keynesian economics believes that AD is ________






11. 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






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






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






14. 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






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






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






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






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






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






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






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






22. _________ will prefer to consume than to save






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






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






25. Inflation that results from an initial increase in costs






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






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






28. Inflation accompanied by simultaneous increases in prices and unemployment






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






30. Encourage foreign investment






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






32. Classical economists believe that the AS curve is _______






33. Fundamental equation of monetarism






34. A sudden and drastic change in the supply curve






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






36. Relation between inflation and unemployment






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






38. This consequence of national debt may lead to inflation






39. Basic Keynesian economic equation






40. Rational Expectations Theorists






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






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






43. The budget must be balanced each year






44. According to Keynesian theory - AS curve is __________






45. Relationship between inflation and unemployment






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






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






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