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






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






3. The competition in the marketplace provides economic stability






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






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






6. According to Keynesian theory - AS curve is __________






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






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






9. One source of public debt






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






11. Keynesian economics believes that AD is ________






12. Fundamental equation of monetarism






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






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






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






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






17. Relationship between inflation and unemployment






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






19. The budget must be balanced each year






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






21. This consequence of national debt may lead to inflation






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






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






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






25. 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






26. 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






27. Inflation that results from an initial increase in costs






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






29. _________ will prefer to consume than to save






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






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






32. A sudden and drastic change in the supply curve






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






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






35. Basic Keynesian economic equation






36. Inflation accompanied by simultaneous increases in prices and unemployment






37. The price level rises and money loses value






38. Relation between inflation and unemployment






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






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






41. Rational Expectations Theorists






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






43. Accumulation of government deficits






44. Money is at the root of aggregate demand






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






46. Classical economists believe that the AS curve is _______






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






48. Encourage foreign investment