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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 fiscal policy is necessary for a balanced budget - would tend to magnify the changes in the economy - and make the business cycle more pronounced






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






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






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






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






6. Inflation accompanied by simultaneous increases in prices and unemployment






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






8. The budget must be balanced each year






9. A sudden and drastic change in the supply curve






10. _________ will prefer to consume than to save






11. One source of public debt






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






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






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






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






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






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






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






19. Fundamental equation of monetarism






20. Relation between inflation and unemployment






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






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






23. Relationship between inflation and unemployment






24. The competition in the marketplace provides economic stability






25. Classical economists believe that the AS curve is _______






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






27. Encourage foreign investment






28. 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






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






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






31. Inflation that results from an initial increase in costs






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






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






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






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






36. Money is at the root of aggregate demand






37. Basic Keynesian economic equation






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






39. According to Keynesian theory - AS curve is __________






40. Keynesian economics believes that AD is ________






41. Rational Expectations Theorists






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






43. This consequence of national debt may lead to inflation






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






45. The price level rises and money loses value






46. Accumulation of government deficits






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






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