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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. 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






2. The budget must be balanced each year






3. The competition in the marketplace provides economic stability






4. Relation between inflation and unemployment






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






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






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






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






9. _________ will prefer to consume than to save






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






11. Money is at the root of aggregate demand






12. This consequence of national debt may lead to inflation






13. Keynesian economics believes that AD is ________






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






15. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






18. 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






19. Relationship between inflation and unemployment






20. One source of public debt






21. Basic Keynesian economic equation






22. Fundamental equation of monetarism






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






24. According to Keynesian theory - AS curve is __________






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






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






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






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






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






30. Encourage foreign investment






31. Rational Expectations Theorists






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






33. A sudden and drastic change in the supply curve






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






35. The price level rises and money loses value






36. Classical economists believe that the AS curve is _______






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






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






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






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






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






42. Accumulation of government deficits






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






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






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






46. Inflation that results from an initial increase in costs






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






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