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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 consequence of national debt may lead to inflation






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






3. Keynesian economics believes that AD is ________






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






5. According to Keynesian theory - AS curve is __________






6. The price level rises and money loses value






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






8. Accumulation of government deficits






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






10. 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






11. Inflation accompanied by simultaneous increases in prices and unemployment






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






13. A sudden and drastic change in the supply curve






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






15. Classical economists believe that the AS curve is _______






16. Money is at the root of aggregate demand






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






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






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






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






21. The competition in the marketplace provides economic stability






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






23. Rational Expectations Theorists






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






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






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






27. Relationship between inflation and unemployment






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






29. Inflation that results from an initial increase in costs






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






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






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






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






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






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






36. Relation between inflation and unemployment






37. 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






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






39. Encourage foreign investment






40. The budget must be balanced each year






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






42. Fundamental equation of monetarism






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






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






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






46. One source of public debt






47. Basic Keynesian economic equation






48. _________ will prefer to consume than to save