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






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






3. Classical economists believe that the AS curve is _______






4. Inflation that results from an initial increase in costs






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






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






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






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






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






10. The budget must be balanced each year






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






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






13. Money is at the root of aggregate demand






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






15. The price level rises and money loses value






16. Rational Expectations Theorists






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






18. According to Keynesian theory - AS curve is __________






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






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






21. This consequence of national debt may lead to inflation






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






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






24. Relationship between inflation and unemployment






25. Relation between inflation and unemployment






26. The competition in the marketplace provides economic stability






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






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






29. _________ will prefer to consume than to save






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






31. 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






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






33. Keynesian economics believes that AD is ________






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






35. Accumulation of government deficits






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






37. Fundamental equation of monetarism






38. Encourage foreign investment






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






40. 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






41. One source of public debt






42. Inflation accompanied by simultaneous increases in prices and unemployment






43. Basic Keynesian economic equation






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






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






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






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






48. A sudden and drastic change in the supply curve