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






2. Inflation that results from an initial increase in costs






3. This consequence of national debt may lead to inflation






4. Rational Expectations Theorists






5. The competition in the marketplace provides economic stability






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






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






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






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






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






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






12. 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






13. _________ will prefer to consume than to save






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






15. The price level rises and money loses value






16. A sudden and drastic change in the supply curve






17. The budget must be balanced each year






18. Money is at the root of aggregate demand






19. Relationship between inflation and unemployment






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






21. Accumulation of government deficits






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






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






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






26. Relation between inflation and unemployment






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






28. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






33. Keynesian economics believes that AD is ________






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






35. Classical economists believe that the AS curve is _______






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






37. According to Keynesian theory - AS curve is __________






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






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






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






41. Basic Keynesian economic equation






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






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






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






45. Fundamental equation of monetarism






46. Encourage foreign investment






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






48. One source of public debt