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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. The price level rises and money loses value






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






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






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






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






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






7. Accumulation of government deficits






8. 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






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






10. _________ will prefer to consume than to save






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






12. Encourage foreign investment






13. Money is at the root of aggregate demand






14. Inflation that results from an initial increase in costs






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






16. Basic Keynesian economic equation






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






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






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






20. Fundamental equation of monetarism






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






22. 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






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






24. Relation between inflation and unemployment






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






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






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






28. According to Keynesian theory - AS curve is __________






29. One source of public debt






30. This consequence of national debt may lead to inflation






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






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






33. The budget must be balanced each year






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






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






36. Relationship between inflation and unemployment






37. Rational Expectations Theorists






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






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






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






41. Classical economists believe that the AS curve is _______






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






43. A sudden and drastic change in the supply curve






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






45. The competition in the marketplace provides economic stability






46. Keynesian economics believes that AD is ________






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






48. Inflation accompanied by simultaneous increases in prices and unemployment