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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. Classical economists believe that the AS curve is _______






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






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






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






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






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






8. Keynesian economics believes that AD is ________






9. Rational Expectations Theorists






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






11. Relation between inflation and unemployment






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






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






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






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






16. 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






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






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






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






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






21. The budget must be balanced each year






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






23. Basic Keynesian economic equation






24. Inflation that results from an initial increase in costs






25. The price level rises and money loses value






26. _________ will prefer to consume than to save






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






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






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






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






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






32. A sudden and drastic change in the supply curve






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






34. According to Keynesian theory - AS curve is __________






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






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






37. This consequence of national debt may lead to inflation






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






39. The competition in the marketplace provides economic stability






40. Fundamental equation of monetarism






41. Relationship between inflation and unemployment






42. One source of public debt






43. Accumulation of government deficits






44. Inflation accompanied by simultaneous increases in prices and unemployment






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






46. Money is at the root of aggregate demand






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






48. Encourage foreign investment