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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. Relationship between inflation and unemployment






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






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






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






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






7. The price level rises and money loses value






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






9. The budget must be balanced each year






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






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






12. The competition in the marketplace provides economic stability






13. This consequence of national debt may lead to inflation






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






15. Encourage foreign investment






16. Keynesian economics believes that AD is ________






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






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






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






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






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






22. 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






23. Inflation that results from an initial increase in costs






24. Accumulation of government deficits






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






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






27. One source of public debt






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






29. Inflation accompanied by simultaneous increases in prices and unemployment






30. Relation between inflation and unemployment






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






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






33. A sudden and drastic change in the supply curve






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






35. 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






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






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






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






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






40. Rational Expectations Theorists






41. According to Keynesian theory - AS curve is __________






42. Fundamental equation of monetarism






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






44. Basic Keynesian economic equation






45. Money is at the root of aggregate demand






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






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






48. Classical economists believe that the AS curve is _______