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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 budget must be balanced each year






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






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






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






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






6. Inflation accompanied by simultaneous increases in prices and unemployment






7. The price level rises and money loses value






8. Keynesian economics believes that AD is ________






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






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






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






12. 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






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






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






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






16. Relationship between inflation and unemployment






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






18. According to Keynesian theory - AS curve is __________






19. The competition in the marketplace provides economic stability






20. Basic Keynesian economic equation






21. Accumulation of government deficits






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






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






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






25. One source of public debt






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






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






28. Relation between inflation and unemployment






29. This consequence of national debt may lead to inflation






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






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






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






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






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






35. Encourage foreign investment






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






37. Fundamental equation of monetarism






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






39. Money is at the root of aggregate demand






40. _________ will prefer to consume than to save






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






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






43. A sudden and drastic change in the supply curve






44. Rational Expectations Theorists






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






46. Classical economists believe that the AS curve is _______






47. 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






48. Inflation that results from an initial increase in costs