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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. Relation between inflation and unemployment






2. Relationship between inflation and unemployment






3. A sudden and drastic change in the supply curve






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






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






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






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






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






9. Encourage foreign investment






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






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






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






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






14. Money is at the root of aggregate demand






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






16. One source of public debt






17. Accumulation of government deficits






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






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






20. According to Keynesian theory - AS curve is __________






21. Inflation that results from an initial increase in costs






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






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






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






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






26. Classical economists believe that the AS curve is _______






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






28. _________ will prefer to consume than to save






29. The price level rises and money loses value






30. 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






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






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






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






34. The budget must be balanced each year






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






36. Basic Keynesian economic equation






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






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






39. Inflation accompanied by simultaneous increases in prices and unemployment






40. Keynesian economics believes that AD is ________






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






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






43. This consequence of national debt may lead to inflation






44. Fundamental equation of monetarism






45. Rational Expectations Theorists






46. 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






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






48. The competition in the marketplace provides economic stability