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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 price level rises and money loses value






2. This consequence of national debt may lead to inflation






3. Fundamental equation of monetarism






4. Classical economists believe that the AS curve is _______






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






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






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






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






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






10. The budget must be balanced each year






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






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






13. Rational Expectations Theorists






14. Relation between inflation and unemployment






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






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






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






18. Inflation that results from an initial increase in costs






19. According to Keynesian theory - AS curve is __________






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






21. Keynesian economics believes that AD is ________






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






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






24. Inflation accompanied by simultaneous increases in prices and unemployment






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






26. Encourage foreign investment






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






28. One source of public debt






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






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






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






32. 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






33. The competition in the marketplace provides economic stability






34. 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






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






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






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






38. Relationship between inflation and unemployment






39. Money is at the root of aggregate demand






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






41. A sudden and drastic change in the supply curve






42. Basic Keynesian economic equation






43. _________ will prefer to consume than to save






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






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






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






47. Accumulation of government deficits






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