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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. Encourage foreign investment






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






3. Inflation that results from an initial increase in costs






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






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






6. Fundamental equation of monetarism






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






8. Rational Expectations Theorists






9. Accumulation of government deficits






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






11. Relationship between inflation and unemployment






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






13. 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






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






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






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






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






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






19. Basic Keynesian economic equation






20. Money is at the root of aggregate demand






21. The competition in the marketplace provides economic stability






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






23. Inflation accompanied by simultaneous increases in prices and unemployment






24. The budget must be balanced each year






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






26. The price level rises and money loses value






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






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






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






30. 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






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






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






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






34. This consequence of national debt may lead to inflation






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






36. One source of public debt






37. Relation between inflation and unemployment






38. According to Keynesian theory - AS curve is __________






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






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






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






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






43. Classical economists believe that the AS curve is _______






44. Keynesian economics believes that AD is ________






45. A sudden and drastic change in the supply curve






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






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






48. _________ will prefer to consume than to save