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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. Money is at the root of aggregate demand






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






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






5. Inflation accompanied by simultaneous increases in prices and unemployment






6. _________ will prefer to consume than to save






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






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






9. 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






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






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






12. Basic Keynesian economic equation






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






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






15. The competition in the marketplace provides economic stability






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






17. Accumulation of government deficits






18. Relationship between inflation and unemployment






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






20. According to Keynesian theory - AS curve is __________






21. The price level rises and money loses value






22. One source of public debt






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






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






25. Encourage foreign investment






26. 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






27. Inflation that results from an initial increase in costs






28. Rational Expectations Theorists






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






30. Keynesian economics believes that AD is ________






31. Relation between inflation and unemployment






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






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






34. The budget must be balanced each year






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






36. A sudden and drastic change in the supply curve






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






38. Classical economists believe that the AS curve is _______






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






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






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






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






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






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






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






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






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






48. Fundamental equation of monetarism