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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. Relation between inflation and unemployment






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






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






5. 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






6. Classical economists believe that the AS curve is _______






7. Fundamental equation of monetarism






8. One source of public debt






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






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






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






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






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






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






15. Money is at the root of aggregate demand






16. Accumulation of government deficits






17. Basic Keynesian economic equation






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






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






20. This consequence of national debt may lead to inflation






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






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






23. According to Keynesian theory - AS curve is __________






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






25. A sudden and drastic change in the supply curve






26. Encourage foreign investment






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






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






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






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






31. 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






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






33. The competition in the marketplace provides economic stability






34. Keynesian economics believes that AD is ________






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






36. The price level rises and money loses value






37. Inflation that results from an initial increase in costs






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






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






40. _________ will prefer to consume than to save






41. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






44. Relationship between inflation and unemployment






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






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






47. Rational Expectations Theorists






48. The budget must be balanced each year