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






2. Relationship between inflation and unemployment






3. Keynesian economics believes that AD is ________






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






5. According to Keynesian theory - AS curve is __________






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






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






8. The price level rises and money loses value






9. A sudden and drastic change in the supply curve






10. Accumulation of government deficits






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






12. Inflation accompanied by simultaneous increases in prices and unemployment






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






14. 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






15. Money is at the root of aggregate demand






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






17. The budget must be balanced each year






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






19. Inflation that results from an initial increase in costs






20. One source of public debt






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






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






23. Classical economists believe that the AS curve is _______






24. Basic Keynesian economic equation






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






26. 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






27. Encourage foreign investment






28. Rational Expectations Theorists






29. Relation between inflation and unemployment






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






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






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






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






34. This consequence of national debt may lead to inflation






35. The competition in the marketplace provides economic stability






36. Fundamental equation of monetarism






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






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






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






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






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






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






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






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






45. _________ will prefer to consume than to save






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






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






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