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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. Which kind of inflation avoids some of the costs?






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






3. The budget must be balanced each year






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






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






6. Basic Keynesian economic equation






7. A sudden and drastic change in the supply curve






8. Money is at the root of aggregate demand






9. This consequence of national debt may lead to inflation






10. Rational Expectations Theorists






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






12. _________ will prefer to consume than to save






13. One source of public debt






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






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






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






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






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






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






20. 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






21. The competition in the marketplace provides economic stability






22. Keynesian economics believes that AD is ________






23. Relation between inflation and unemployment






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






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






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






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






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






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






30. Relationship between inflation and unemployment






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






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






33. Fundamental equation of monetarism






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






35. Inflation that results from an initial increase in costs






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






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






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






39. 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






40. Accumulation of government deficits






41. Inflation accompanied by simultaneous increases in prices and unemployment






42. Classical economists believe that the AS curve is _______






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






44. The price level rises and money loses value






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






46. Encourage foreign investment






47. According to Keynesian theory - AS curve is __________






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