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






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






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






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






6. The price level rises and money loses value






7. Inflation accompanied by simultaneous increases in prices and unemployment






8. Relationship between inflation and unemployment






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






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






11. The budget must be balanced each year






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






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






14. This consequence of national debt may lead to inflation






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






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






17. The competition in the marketplace provides economic stability






18. Basic Keynesian economic equation






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






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






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






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






23. Relation between inflation and unemployment






24. A sudden and drastic change in the supply curve






25. Keynesian economics believes that AD is ________






26. Accumulation of government deficits






27. 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






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






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






30. 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






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






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






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






34. Fundamental equation of monetarism






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






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






37. One source of public debt






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






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






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






41. Rational Expectations Theorists






42. Encourage foreign investment






43. According to Keynesian theory - AS curve is __________






44. Money is at the root of aggregate demand






45. Inflation that results from an initial increase in costs






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






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






48. _________ will prefer to consume than to save