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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. Inflation that results from an initial increase in costs






2. Encourage foreign investment






3. One source of public debt






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






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






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






7. Money is at the root of aggregate demand






8. The competition in the marketplace provides economic stability






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






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






11. The price level rises and money loses value






12. Rational Expectations Theorists






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






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






16. Accumulation of government deficits






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






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






19. A sudden and drastic change in the supply curve






20. Fundamental equation of monetarism






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






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






23. Relation between inflation and unemployment






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






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






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






27. Classical economists believe that the AS curve is _______






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






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






30. According to Keynesian theory - AS curve is __________






31. Keynesian economics believes that AD is ________






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






33. Inflation accompanied by simultaneous increases in prices and unemployment






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






35. Relationship between inflation and unemployment






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






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






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






39. 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






40. Basic Keynesian economic equation






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






42. The budget must be balanced each year






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






44. _________ will prefer to consume than to save






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






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






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






48. This consequence of national debt may lead to inflation