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






2. Fundamental equation of monetarism






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






4. The budget must be balanced each year






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






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






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






8. According to Keynesian theory - AS curve is __________






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






10. Encourage foreign investment






11. 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






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






13. Relation between inflation and unemployment






14. Relationship between inflation and unemployment






15. Money is at the root of aggregate demand






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






17. Keynesian economics believes that AD is ________






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






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






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






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






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






23. Basic Keynesian economic equation






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






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






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






27. Inflation that results from an initial increase in costs






28. One source of public debt






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






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






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






32. This consequence of national debt may lead to inflation






33. Classical economists believe that the AS curve is _______






34. _________ will prefer to consume than to save






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






36. Inflation accompanied by simultaneous increases in prices and unemployment






37. The competition in the marketplace provides economic stability






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






39. A sudden and drastic change in the supply curve






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






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






42. Accumulation of government deficits






43. Rational Expectations Theorists






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






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






46. 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






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






48. The price level rises and money loses value