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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 20 minutes. 1 minute extra for reading the instructions.
  • 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 kind of budget exerts counter-cyclical pressure on the economy - balancing the budgets in the bad times with the surpluses of the good times






2. This consequence of national debt may lead to inflation






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






4. According to Keynesian theory - AS curve is __________






5. Money is at the root of aggregate demand






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






7. A sudden and drastic change in the supply curve






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






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






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






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






12. _________ will prefer to consume than to save






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






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






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






16. The competition in the marketplace provides economic stability






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






18. Basic Keynesian economic equation






19. Accumulation of government deficits






20. Inflation accompanied by simultaneous increases in prices and unemployment






21. Rational Expectations Theorists






22. Classical economists believe that the AS curve is _______






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






24. Encourage foreign investment






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






26. Fundamental equation of monetarism






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






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






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






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






31. One source of public debt






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






33. Inflation that results from an initial increase in costs






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






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






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






37. Keynesian economics believes that AD is ________






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






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






40. 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






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






42. The price level rises and money loses value






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






44. Relation between inflation and unemployment






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






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






47. Relationship between inflation and unemployment






48. The budget must be balanced each year