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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 kind of budget exerts counter-cyclical pressure on the economy - balancing the budgets in the bad times with the surpluses of the good times






2. Relationship between inflation and unemployment






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






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






5. A sudden and drastic change in the supply curve






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






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






8. Fundamental equation of monetarism






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






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






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






12. The competition in the marketplace provides economic stability






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






14. One source of public debt






15. Inflation that results from an initial increase in costs






16. Rational Expectations Theorists






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






18. _________ will prefer to consume than to save






19. Basic Keynesian economic equation






20. Relation between inflation and unemployment






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






22. Classical economists believe that the AS curve is _______






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






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






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






26. Accumulation of government deficits






27. The price level rises and money loses value






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






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






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






31. This consequence of national debt may lead to inflation






32. The budget must be balanced each year






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






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






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






36. According to Keynesian theory - AS curve is __________






37. Inflation accompanied by simultaneous increases in prices and unemployment






38. 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






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






40. Keynesian economics believes that AD is ________






41. Money is at the root of aggregate demand






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






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






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






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






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






47. Encourage foreign investment






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