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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. Classical economists believe that the AS curve is _______






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






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






4. Basic Keynesian economic equation






5. Relation between inflation and unemployment






6. Rational Expectations Theorists






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






8. Relationship between inflation and unemployment






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






10. Inflation accompanied by simultaneous increases in prices and unemployment






11. The budget must be balanced each year






12. One source of public debt






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






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






15. Keynesian economics believes that AD is ________






16. Encourage foreign investment






17. 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






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






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






20. A sudden and drastic change in the supply curve






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






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






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






24. Inflation that results from an initial increase in costs






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






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






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






28. Money is at the root of aggregate demand






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






30. This consequence of national debt may lead to inflation






31. Fundamental equation of monetarism






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






33. _________ will prefer to consume than to save






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






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






36. The competition in the marketplace provides economic stability






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






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






39. The price level rises and money loses value






40. 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






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






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






43. Accumulation of government deficits






44. According to Keynesian theory - AS curve is __________






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






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






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






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