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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. Classical economists believe that the AS curve is _______






2. Relation between inflation and unemployment






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






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






5. Encourage foreign investment






6. This consequence of national debt may lead to inflation






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






8. Inflation that results from an initial increase in costs






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






10. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






14. 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






15. Accumulation of government deficits






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






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






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






19. According to Keynesian theory - AS curve is __________






20. 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






21. Relationship between inflation and unemployment






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






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






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






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






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






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






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






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






30. Keynesian economics believes that AD is ________






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






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






33. A sudden and drastic change in the supply curve






34. Basic Keynesian economic equation






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






36. _________ will prefer to consume than to save






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






38. Money is at the root of aggregate demand






39. The budget must be balanced each year






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






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






42. Fundamental equation of monetarism






43. Rational Expectations Theorists






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






45. The price level rises and money loses value






46. One source of public debt






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






48. The competition in the marketplace provides economic stability