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






2. Encourage foreign investment






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






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






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






6. Fundamental equation of monetarism






7. Basic Keynesian economic equation






8. This consequence of national debt may lead to inflation






9. Rational Expectations Theorists






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






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






12. One source of public debt






13. Money is at the root of aggregate demand






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






15. Relationship between inflation and unemployment






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






17. Keynesian economics believes that AD is ________






18. The price level rises and money loses value






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






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






21. A sudden and drastic change in the supply curve






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






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






24. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






28. Inflation that results from an initial increase in costs






29. _________ will prefer to consume than to save






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






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






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






33. Classical economists believe that the AS curve is _______






34. Accumulation of government deficits






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






36. The competition in the marketplace provides economic stability






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






38. 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






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






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






41. 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






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






43. The budget must be balanced each year






44. Relation between inflation and unemployment






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






46. According to Keynesian theory - AS curve is __________






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






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