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






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






3. The budget must be balanced each year






4. Inflation that results from an initial increase in costs






5. Keynesian economics believes that AD is ________






6. Basic Keynesian economic equation






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






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






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






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






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






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






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






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






15. The competition in the marketplace provides economic stability






16. Inflation accompanied by simultaneous increases in prices and unemployment






17. 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






18. Encourage foreign investment






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






20. One source of public debt






21. _________ will prefer to consume than to save






22. Money is at the root of aggregate demand






23. Accumulation of government deficits






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






25. This consequence of national debt may lead to inflation






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






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






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






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






30. Relationship between inflation and unemployment






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






32. According to Keynesian theory - AS curve is __________






33. Rational Expectations Theorists






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






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






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






37. The price level rises and money loses value






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






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






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






41. Fundamental equation of monetarism






42. A sudden and drastic change in the supply curve






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






44. Relation between inflation and unemployment






45. Classical economists believe that the AS curve is _______






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






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






48. 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