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






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






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






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






5. 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






6. Inflation accompanied by simultaneous increases in prices and unemployment






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






8. Relationship between inflation and unemployment






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






10. A sudden and drastic change in the supply curve






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






12. Keynesian economics believes that AD is ________






13. Fundamental equation of monetarism






14. The competition in the marketplace provides economic stability






15. The price level rises and money loses value






16. One source of public debt






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






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






19. The budget must be balanced each year






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






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






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






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






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






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






26. Money is at the root of aggregate demand






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






28. This consequence of national debt may lead to inflation






29. Classical economists believe that the AS curve is _______






30. Relation between inflation and unemployment






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






32. Encourage foreign investment






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






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






35. According to Keynesian theory - AS curve is __________






36. 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






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






38. _________ will prefer to consume than to save






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






40. Accumulation of government deficits






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






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






43. Inflation that results from an initial increase in costs






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






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






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






47. Basic Keynesian economic equation






48. Rational Expectations Theorists