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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. Basic Keynesian economic equation






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






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






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






5. 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






6. The price level rises and money loses value






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






8. This consequence of national debt may lead to inflation






9. The budget must be balanced each year






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






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






12. _________ will prefer to consume than to save






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






14. Relationship between inflation and unemployment






15. Classical economists believe that the AS curve is _______






16. Money is at the root of aggregate demand






17. Fundamental equation of monetarism






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






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






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






21. A sudden and drastic change in the supply curve






22. Inflation accompanied by simultaneous increases in prices and unemployment






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






24. Keynesian economics believes that AD is ________






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






26. According to Keynesian theory - AS curve is __________






27. Rational Expectations Theorists






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






29. The competition in the marketplace provides economic stability






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






31. Relation between inflation and unemployment






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






33. Accumulation of government deficits






34. One source of public debt






35. Inflation that results from an initial increase in costs






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






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






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






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






40. Encourage foreign investment






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






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






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






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






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






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






47. 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






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