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






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






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






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






5. 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






6. Inflation accompanied by simultaneous increases in prices and unemployment






7. This consequence of national debt may lead to inflation






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






9. Classical economists believe that the AS curve is _______






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






11. Basic Keynesian economic equation






12. One source of public debt






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






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






15. Relationship between inflation and unemployment






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






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






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






19. The price level rises and money loses value






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






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






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






23. Money is at the root of aggregate demand






24. A sudden and drastic change in the supply curve






25. 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






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






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






28. The competition in the marketplace provides economic stability






29. Keynesian economics believes that AD is ________






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






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






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






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






34. Relation between inflation and unemployment






35. The budget must be balanced each year






36. Accumulation of government deficits






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






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






39. According to Keynesian theory - AS curve is __________






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






41. Encourage foreign investment






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






43. Inflation that results from an initial increase in costs






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






45. Fundamental equation of monetarism






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






47. _________ will prefer to consume than to save






48. Rational Expectations Theorists