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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. Basic Keynesian economic equation






2. Keynesian economics believes that AD is ________






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






4. _________ will prefer to consume than to save






5. Inflation that results from an initial increase in costs






6. One source of public debt






7. The competition in the marketplace provides economic stability






8. 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






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






10. 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






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






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






13. The budget must be balanced each year






14. Classical economists believe that the AS curve is _______






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






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






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






18. This consequence of national debt may lead to inflation






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






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






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






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






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






24. Rational Expectations Theorists






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






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






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






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






29. A sudden and drastic change in the supply curve






30. Relation between inflation and unemployment






31. Inflation accompanied by simultaneous increases in prices and unemployment






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






33. Fundamental equation of monetarism






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






35. According to Keynesian theory - AS curve is __________






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






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






38. Accumulation of government deficits






39. Money is at the root of aggregate demand






40. Encourage foreign investment






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






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






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






44. The price level rises and money loses value






45. Relationship between inflation and unemployment






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






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






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