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






2. One source of public debt






3. Relation between inflation and unemployment






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






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






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






7. Inflation accompanied by simultaneous increases in prices and unemployment






8. _________ will prefer to consume than to save






9. Classical economists believe that the AS curve is _______






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






11. According to Keynesian theory - AS curve is __________






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






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






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






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






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






17. Relationship between inflation and unemployment






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






19. Basic Keynesian economic equation






20. The competition in the marketplace provides economic stability






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






22. This consequence of national debt may lead to inflation






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






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






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






26. The price level rises and money loses value






27. Keynesian economics believes that AD is ________






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






29. Rational Expectations Theorists






30. 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






31. A sudden and drastic change in the supply curve






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






33. The budget must be balanced each year






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






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






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






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






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






39. Money is at the root of aggregate demand






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






41. Accumulation of government deficits






42. Fundamental equation of monetarism






43. Inflation that results from an initial increase in costs






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






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






46. Encourage foreign investment






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






48. 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