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






2. Inflation accompanied by simultaneous increases in prices and unemployment






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






4. 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






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






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






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






8. _________ will prefer to consume than to save






9. According to Keynesian theory - AS curve is __________






10. Accumulation of government deficits






11. Money is at the root of aggregate demand






12. Fundamental equation of monetarism






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






14. Relation between inflation and unemployment






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






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






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






18. Rational Expectations Theorists






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






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






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






22. Inflation that results from an initial increase in costs






23. Relationship between inflation and unemployment






24. This consequence of national debt may lead to inflation






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






26. A sudden and drastic change in the supply curve






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






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






29. 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






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






31. The competition in the marketplace provides economic stability






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






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






34. One source of public debt






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






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






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






38. The price level rises and money loses value






39. Encourage foreign investment






40. Basic Keynesian economic equation






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






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






43. Classical economists believe that the AS curve is _______






44. Keynesian economics believes that AD is ________






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






46. The budget must be balanced each year






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






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