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






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






4. Fundamental equation of monetarism






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






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






7. Accumulation of government deficits






8. _________ will prefer to consume than to save






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






10. The budget must be balanced each year






11. Encourage foreign investment






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






13. A sudden and drastic change in the supply curve






14. One source of public debt






15. Money is at the root of aggregate demand






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






17. Relationship between inflation and unemployment






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






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






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






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






22. According to Keynesian theory - AS curve is __________






23. 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






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






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






26. This consequence of national debt may lead to inflation






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






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






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






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






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






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






33. Basic Keynesian economic equation






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






35. Rational Expectations Theorists






36. Inflation accompanied by simultaneous increases in prices and unemployment






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






38. The competition in the marketplace provides economic stability






39. Keynesian economics believes that AD is ________






40. The price level rises and money loses value






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






42. Relation between inflation and unemployment






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






44. 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






45. Classical economists believe that the AS curve is _______






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






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






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