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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. This consequence of national debt may lead to inflation






2. _________ will prefer to consume than to save






3. The competition in the marketplace provides economic stability






4. Keynesian economics believes that AD is ________






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






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






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






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






9. According to Keynesian theory - AS curve is __________






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






11. Basic Keynesian economic equation






12. The price level rises and money loses value






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






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






15. The budget must be balanced each year






16. Relation between inflation and unemployment






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






18. A sudden and drastic change in the supply curve






19. Encourage foreign investment






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






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






22. Money is at the root of aggregate demand






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






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






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






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






27. 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






28. Inflation accompanied by simultaneous increases in prices and unemployment






29. Rational Expectations Theorists






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






31. Inflation that results from an initial increase in costs






32. Fundamental equation of monetarism






33. Accumulation of government deficits






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






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






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






37. One source of public debt






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






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






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






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






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






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






44. Classical economists believe that the AS curve is _______






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






46. 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






47. Relationship between inflation and unemployment






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