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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 supply - velocity - price level - physical volume of goods and services






2. The competition in the marketplace provides economic stability






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






4. 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






5. Rational Expectations Theorists






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






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






8. This consequence of national debt may lead to inflation






9. Classical economists believe that the AS curve is _______






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






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






12. One source of public debt






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






14. _________ will prefer to consume than to save






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






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






17. Inflation accompanied by simultaneous increases in prices and unemployment






18. A sudden and drastic change in the supply curve






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






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






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






22. Basic Keynesian economic equation






23. The budget must be balanced each year






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






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






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






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






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






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






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






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






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






33. Relation between inflation and unemployment






34. Keynesian economics believes that AD is ________






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






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






37. Accumulation of government deficits






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






39. Encourage foreign investment






40. Fundamental equation of monetarism






41. The price level rises and money loses value






42. Money is at the root of aggregate demand






43. Relationship between inflation and unemployment






44. 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






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






46. Inflation that results from an initial increase in costs






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






48. According to Keynesian theory - AS curve is __________