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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. Keynesian economics believes that AD is ________






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






3. One source of public debt






4. Basic Keynesian economic equation






5. Encourage foreign investment






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






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






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






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






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






11. This consequence of national debt may lead to inflation






12. 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






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






14. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






17. The competition in the marketplace provides economic stability






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






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






20. Relationship between inflation and unemployment






21. Fundamental equation of monetarism






22. Inflation that results from an initial increase in costs






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






24. The price level rises and money loses value






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






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






27. Accumulation of government deficits






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






29. The budget must be balanced each year






30. According to Keynesian theory - AS curve is __________






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






32. Relation between inflation and unemployment






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






34. 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






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






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






37. Money is at the root of aggregate demand






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






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






40. Classical economists believe that the AS curve is _______






41. Rational Expectations Theorists






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






43. _________ will prefer to consume than to save






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






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






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






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






48. A sudden and drastic change in the supply curve