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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. Rational Expectations Theorists






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






3. Encourage foreign investment






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






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






6. A sudden and drastic change in the supply curve






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






8. Money is at the root of aggregate demand






9. Keynesian economics believes that AD is ________






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






11. Relation between inflation and unemployment






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






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






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






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






16. The price level rises and money loses value






17. Classical economists believe that the AS curve is _______






18. Inflation accompanied by simultaneous increases in prices and unemployment






19. Fundamental equation of monetarism






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






21. One source of public debt






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






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






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






25. Inflation that results from an initial increase in costs






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






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






28. The budget must be balanced each year






29. Basic Keynesian economic equation






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






31. The competition in the marketplace provides economic stability






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






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






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






35. _________ will prefer to consume than to save






36. According to Keynesian theory - AS curve is __________






37. 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






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






39. Accumulation of government deficits






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






41. This consequence of national debt may lead to inflation






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






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






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






45. 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






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






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






48. Relationship between inflation and unemployment