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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. Classical economists believe that the AS curve is _______






3. _________ will prefer to consume than to save






4. According to Keynesian theory - AS curve is __________






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






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






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






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






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






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






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






14. This consequence of national debt may lead to inflation






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






16. One source of public debt






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






18. Keynesian economics believes that AD is ________






19. Encourage foreign investment






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






21. Rational Expectations Theorists






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






23. Accumulation of government deficits






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






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






26. The budget must be balanced each year






27. The competition in the marketplace provides economic stability






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






29. A sudden and drastic change in the supply curve






30. Basic Keynesian economic equation






31. The price level rises and money loses value






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






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






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






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






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






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






38. Relation between inflation and unemployment






39. Relationship between inflation and unemployment






40. Money is at the root of aggregate demand






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






42. Fundamental equation of monetarism






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






44. 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






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






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






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






48. Inflation that results from an initial increase in costs