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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. _________ will prefer to consume than to save






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






3. Fundamental equation of monetarism






4. Accumulation of government deficits






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






6. Relation between inflation and unemployment






7. This consequence of national debt may lead to inflation






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






9. One source of public debt






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






11. The competition in the marketplace provides economic stability






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






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






14. Inflation accompanied by simultaneous increases in prices and unemployment






15. Encourage foreign investment






16. Classical economists believe that the AS curve is _______






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






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






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






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






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






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






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






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






26. Money is at the root of aggregate demand






27. A sudden and drastic change in the supply curve






28. According to Keynesian theory - AS curve is __________






29. Basic Keynesian economic equation






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






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






32. Rational Expectations Theorists






33. The budget must be balanced each year






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






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






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






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






38. Relationship between inflation and unemployment






39. The price level rises and money loses value






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






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






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






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






45. Inflation that results from an initial increase in costs






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






47. Keynesian economics believes that AD is ________






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