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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 competition in the marketplace provides economic stability






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






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






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






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






6. One source of public debt






7. Accumulation of government deficits






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






9. Encourage foreign investment






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






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






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






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






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






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






16. Inflation accompanied by simultaneous increases in prices and unemployment






17. Money is at the root of aggregate demand






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






19. Classical economists believe that the AS curve is _______






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






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






22. The budget must be balanced each year






23. Keynesian economics believes that AD is ________






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






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






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






27. The price level rises and money loses value






28. A sudden and drastic change in the supply curve






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






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






31. Relation between inflation and unemployment






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






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






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






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






37. Basic Keynesian economic equation






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






39. Inflation that results from an initial increase in costs






40. _________ will prefer to consume than to save






41. Rational Expectations Theorists






42. 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






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






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






45. This consequence of national debt may lead to inflation






46. Relationship between inflation and unemployment






47. According to Keynesian theory - AS curve is __________






48. Fundamental equation of monetarism