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






3. One source of public debt






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






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






6. Rational Expectations Theorists






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






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






9. 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






10. The competition in the marketplace provides economic stability






11. Accumulation of government deficits






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. This consequence of national debt may lead to inflation






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






16. Relation between inflation and unemployment






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






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






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






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






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






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






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






24. According to Keynesian theory - AS curve is __________






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






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






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






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






29. Keynesian economics believes that AD is ________






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






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






32. _________ will prefer to consume than to save






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






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






35. Money is at the root of aggregate demand






36. Inflation accompanied by simultaneous increases in prices and unemployment






37. A sudden and drastic change in the supply curve






38. The price level rises and money loses value






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






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






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






42. Encourage foreign investment






43. Fundamental equation of monetarism






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






45. Relationship between inflation and unemployment






46. The budget must be balanced each year






47. Basic Keynesian economic equation






48. Classical economists believe that the AS curve is _______