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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 competition in the marketplace provides economic stability






2. According to Keynesian theory - AS curve is __________






3. Relationship between inflation and unemployment






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






5. Basic Keynesian economic equation






6. Money is at the root of aggregate demand






7. _________ will prefer to consume than to save






8. Relation between inflation and unemployment






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






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






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






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






13. This consequence of national debt may lead to inflation






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






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






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






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






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






19. One source of public debt






20. Classical economists believe that the AS curve is _______






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






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






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






24. Keynesian economics believes that AD is ________






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






26. A sudden and drastic change in the supply curve






27. The budget must be balanced each year






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






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






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






31. Encourage foreign investment






32. Fundamental equation of monetarism






33. 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






34. 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






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






36. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






40. Rational Expectations Theorists






41. Accumulation of government deficits






42. Inflation that results from an initial increase in costs






43. The price level rises and money loses value






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






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






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






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






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