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






2. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






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






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






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






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






11. Classical economists believe that the AS curve is _______






12. 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






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






14. This consequence of national debt may lead to inflation






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






16. Keynesian economics believes that AD is ________






17. Fundamental equation of monetarism






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






19. The price level rises and money loses value






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






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






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






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






24. The competition in the marketplace provides economic stability






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






26. The budget must be balanced each year






27. A sudden and drastic change in the supply curve






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






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






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






31. Rational Expectations Theorists






32. Relation between inflation and unemployment






33. Accumulation of government deficits






34. Basic Keynesian economic equation






35. Inflation that results from an initial increase in costs






36. 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






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






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






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






40. _________ will prefer to consume than to save






41. Relationship between inflation and unemployment






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






43. Encourage foreign investment






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






45. Money is at the root of aggregate demand






46. According to Keynesian theory - AS curve is __________






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






48. One source of public debt