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






2. According to Keynesian theory - AS curve is __________






3. 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






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






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






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






7. Rational Expectations Theorists






8. The price level rises and money loses value






9. Classical economists believe that the AS curve is _______






10. Inflation that results from an initial increase in costs






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






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






13. Basic Keynesian economic equation






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






15. Keynesian economics believes that AD is ________






16. Fundamental equation of monetarism






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






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






19. Accumulation of government deficits






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






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






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






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






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






25. Relationship between inflation and unemployment






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






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






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






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






30. Encourage foreign investment






31. The competition in the marketplace provides economic stability






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






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






34. 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






35. One source of public debt






36. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






39. The budget must be balanced each year






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






41. _________ will prefer to consume than to save






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






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






44. A sudden and drastic change in the supply curve






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






46. Relation between inflation and unemployment






47. Money is at the root of aggregate demand






48. This consequence of national debt may lead to inflation