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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. Encourage foreign investment






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






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






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






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






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






7. 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






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






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






10. The price level rises and money loses value






11. Rational Expectations Theorists






12. Money is at the root of aggregate demand






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






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






15. One source of public debt






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






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






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






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






20. The competition in the marketplace provides economic stability






21. _________ will prefer to consume than to save






22. Basic Keynesian economic equation






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






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






25. A sudden and drastic change in the supply curve






26. Relationship between inflation and unemployment






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






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






29. 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






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






31. Inflation that results from an initial increase in costs






32. Accumulation of government deficits






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






34. Fundamental equation of monetarism






35. Relation between inflation and unemployment






36. This consequence of national debt may lead to inflation






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






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






39. Keynesian economics believes that AD is ________






40. According to Keynesian theory - AS curve is __________






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






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






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






44. Inflation accompanied by simultaneous increases in prices and unemployment






45. Classical economists believe that the AS curve is _______






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






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






48. The budget must be balanced each year