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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. Rational Expectations Theorists






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






3. A sudden and drastic change in the supply curve






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






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






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






7. Relationship between inflation and unemployment






8. Inflation that results from an initial increase in costs






9. Encourage foreign investment






10. Relation between inflation and unemployment






11. One source of public debt






12. Fundamental equation of monetarism






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






14. Classical economists believe that the AS curve is _______






15. Basic Keynesian economic equation






16. 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






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






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






19. This consequence of national debt may lead to inflation






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






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






22. The competition in the marketplace provides economic stability






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






24. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






27. According to Keynesian theory - AS curve is __________






28. Keynesian economics believes that AD is ________






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






30. The budget must be balanced each year






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






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






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






34. Accumulation of government deficits






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






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






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






38. 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






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






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






41. _________ will prefer to consume than to save






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






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






44. Money is at the root of aggregate demand






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






46. The price level rises and money loses value






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






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