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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. One source of public debt






2. According to Keynesian theory - AS curve is __________






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






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






5. Inflation that results from an initial increase in costs






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






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






8. This consequence of national debt may lead to inflation






9. Accumulation of government deficits






10. The competition in the marketplace provides economic stability






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






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






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






14. A sudden and drastic change in the supply curve






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






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






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






18. The price level rises and money loses value






19. Basic Keynesian economic equation






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






21. Classical economists believe that the AS curve is _______






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






23. 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






24. Rational Expectations Theorists






25. Relationship between inflation and unemployment






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






27. Money is at the root of aggregate demand






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






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






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






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






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






33. Relation between inflation and unemployment






34. _________ will prefer to consume than to save






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






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






37. The budget must be balanced each year






38. Fundamental equation of monetarism






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






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






41. Encourage foreign investment






42. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






46. Keynesian economics believes that AD is ________






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






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