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






2. Inflation that results from an initial increase in costs






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






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






5. Fundamental equation of monetarism






6. 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






7. Encourage foreign investment






8. Money is at the root of aggregate demand






9. The price level rises and money loses value






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






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






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






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






14. A sudden and drastic change in the supply curve






15. Relationship between inflation and unemployment






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






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






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






19. This consequence of national debt may lead to inflation






20. Classical economists believe that the AS curve is _______






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






22. Basic Keynesian economic equation






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






24. The competition in the marketplace provides economic stability






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






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






27. One source of public debt






28. Keynesian economics believes that AD is ________






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






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






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






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






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






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






35. Relation between inflation and unemployment






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






37. _________ will prefer to consume than to save






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






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






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






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






42. 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






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






44. Accumulation of government deficits






45. Inflation accompanied by simultaneous increases in prices and unemployment






46. According to Keynesian theory - AS curve is __________






47. Rational Expectations Theorists






48. The budget must be balanced each year