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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. Relationship between inflation and unemployment






2. Rational Expectations Theorists






3. Classical economists believe that the AS curve is _______






4. 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






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






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






7. Inflation that results from an initial increase in costs






8. The budget must be balanced each year






9. The price level rises and money loses value






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






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






12. Encourage foreign investment






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






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






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






16. Basic Keynesian economic equation






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






18. Money is at the root of aggregate demand






19. A sudden and drastic change in the supply curve






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






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






22. According to Keynesian theory - AS curve is __________






23. Fundamental equation of monetarism






24. One source of public debt






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






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






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






28. _________ will prefer to consume than to save






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






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






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






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






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






34. Relation between inflation and unemployment






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






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






37. 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






38. The competition in the marketplace provides economic stability






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






40. This consequence of national debt may lead to inflation






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






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






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






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






45. Keynesian economics believes that AD is ________






46. Inflation accompanied by simultaneous increases in prices and unemployment






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






48. Accumulation of government deficits