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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. Money is at the root of aggregate demand






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






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






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






5. Classical economists believe that the AS curve is _______






6. Accumulation of government deficits






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






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






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






10. Encourage foreign investment






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






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






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






14. Inflation accompanied by simultaneous increases in prices and unemployment






15. Relationship between inflation and unemployment






16. 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






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






18. A sudden and drastic change in the supply curve






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






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






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






22. 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






23. This consequence of national debt may lead to inflation






24. One source of public debt






25. The competition in the marketplace provides economic stability






26. The price level rises and money loses value






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






28. According to Keynesian theory - AS curve is __________






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






30. Inflation that results from an initial increase in costs






31. Keynesian economics believes that AD is ________






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






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






34. Relation between inflation and unemployment






35. Basic Keynesian economic equation






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






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






38. The budget must be balanced each year






39. _________ will prefer to consume than to save






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






41. Rational Expectations Theorists






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






43. Fundamental equation of monetarism






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






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






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






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






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