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






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






3. Rational Expectations Theorists






4. The budget must be balanced each year






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






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






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






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






9. The price level rises and money loses value






10. Classical economists believe that the AS curve is _______






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






12. _________ will prefer to consume than to save






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






14. According to Keynesian theory - AS curve is __________






15. Relation between inflation and unemployment






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






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






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






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






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






21. Basic Keynesian economic equation






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






23. Money is at the root of aggregate demand






24. The competition in the marketplace provides economic stability






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






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






27. A sudden and drastic change in the supply curve






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






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






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






31. Accumulation of government deficits






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






33. One source of public debt






34. Relationship between inflation and unemployment






35. This consequence of national debt may lead to inflation






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






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






38. 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






39. Keynesian economics believes that AD is ________






40. 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






41. Inflation accompanied by simultaneous increases in prices and unemployment






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






43. Fundamental equation of monetarism






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






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






46. Inflation that results from an initial increase in costs






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






48. Encourage foreign investment