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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 accompanied by simultaneous increases in prices and unemployment






2. 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






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






4. A sudden and drastic change in the supply curve






5. One source of public debt






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






7. The budget must be balanced each year






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






9. Accumulation of government deficits






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






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






12. Inflation that results from an initial increase in costs






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






14. Money is at the root of aggregate demand






15. The price level rises and money loses value






16. The competition in the marketplace provides economic stability






17. 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






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






19. Fundamental equation of monetarism






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






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






22. According to Keynesian theory - AS curve is __________






23. Keynesian economics believes that AD is ________






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






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






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






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






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






29. Relationship between inflation and unemployment






30. This consequence of national debt may lead to inflation






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






32. Encourage foreign investment






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






34. Basic Keynesian economic equation






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






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






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






38. Classical economists believe that the AS curve is _______






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






40. Rational Expectations Theorists






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






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






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






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






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






46. Relation between inflation and unemployment






47. _________ will prefer to consume than to save






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