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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. Money is at the root of aggregate demand






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






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






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






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






6. Encourage foreign investment






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






8. 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






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






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






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






12. Relation between inflation and unemployment






13. Basic Keynesian economic equation






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






15. According to Keynesian theory - AS curve is __________






16. One source of public debt






17. Inflation that results from an initial increase in costs






18. 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






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






20. The price level rises and money loses value






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






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






23. A sudden and drastic change in the supply curve






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






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






26. Keynesian economics believes that AD is ________






27. _________ will prefer to consume than to save






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






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






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






31. Rational Expectations Theorists






32. Accumulation of government deficits






33. Classical economists believe that the AS curve is _______






34. This consequence of national debt may lead to inflation






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






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






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






38. The competition in the marketplace provides economic stability






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






40. The budget must be balanced each year






41. Relationship between inflation and unemployment






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






43. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






47. Fundamental equation of monetarism






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