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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 RET - cost of this depends on whether or not it is expected






2. One source of public debt






3. The competition in the marketplace provides economic stability






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






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






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






7. This consequence of national debt may lead to inflation






8. The price level rises and money loses value






9. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






14. Keynesian economics believes that AD is ________






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






16. 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






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






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






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






20. Relationship between inflation and unemployment






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






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






23. Fundamental equation of monetarism






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






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






26. According to Keynesian theory - AS curve is __________






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






28. Inflation that results from an initial increase in costs






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






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






31. 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






32. Relation between inflation and unemployment






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






34. Accumulation of government deficits






35. _________ will prefer to consume than to save






36. Classical economists believe that the AS curve is _______






37. A sudden and drastic change in the supply curve






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






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






40. Money is at the root of aggregate demand






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






42. Rational Expectations Theorists






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






44. Basic Keynesian economic equation






45. Encourage foreign investment






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






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






48. The budget must be balanced each year