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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. The budget must be balanced each year






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






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






4. Keynesian economics believes that AD is ________






5. A sudden and drastic change in the supply curve






6. Fundamental equation of monetarism






7. Relation between inflation and unemployment






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






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






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






11. Classical economists believe that the AS curve is _______






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






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






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






15. Accumulation of government deficits






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






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






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






19. Encourage foreign investment






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






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






22. Inflation accompanied by simultaneous increases in prices and unemployment






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






24. 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






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






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






27. The competition in the marketplace provides economic stability






28. 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






29. According to Keynesian theory - AS curve is __________






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






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






32. This consequence of national debt may lead to inflation






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






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






35. One source of public debt






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






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






38. Relationship between inflation and unemployment






39. Basic Keynesian economic equation






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






41. Inflation that results from an initial increase in costs






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






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






44. Money is at the root of aggregate demand






45. Rational Expectations Theorists






46. The price level rises and money loses value






47. _________ will prefer to consume than to save






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