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






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






4. Rational Expectations Theorists






5. Keynesian economics believes that AD is ________






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






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






8. Accumulation of government deficits






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






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






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






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






13. The competition in the marketplace provides economic stability






14. Basic Keynesian economic equation






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






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






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






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






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






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






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






22. Classical economists believe that the AS curve is _______






23. According to Keynesian theory - AS curve is __________






24. Money is at the root of aggregate demand






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






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






27. Fundamental equation of monetarism






28. A sudden and drastic change in the supply curve






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






30. Inflation that results from an initial increase in costs






31. The budget must be balanced each year






32. 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






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






34. This consequence of national debt may lead to inflation






35. 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






36. Encourage foreign investment






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






38. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






42. The price level rises and money loses value






43. Relationship between inflation and unemployment






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






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






46. _________ will prefer to consume than to save






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






48. Relation between inflation and unemployment