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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. 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. The competition in the marketplace provides economic stability






3. One source of public debt






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






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






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






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






8. A sudden and drastic change in the supply curve






9. The price level rises and money loses value






10. Relationship between inflation and unemployment






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






12. Accumulation of government deficits






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






14. 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






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






16. Inflation that results from an initial increase in costs






17. Fundamental equation of monetarism






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






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






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






21. The budget must be balanced each year






22. Classical economists believe that the AS curve is _______






23. Keynesian economics believes that AD is ________






24. Inflation accompanied by simultaneous increases in prices and unemployment






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






26. According to Keynesian theory - AS curve is __________






27. Encourage foreign investment






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






29. _________ will prefer to consume than to save






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






31. Relation between inflation and unemployment






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






33. Rational Expectations Theorists






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






35. Basic Keynesian economic equation






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






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






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






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






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






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






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






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






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






45. This consequence of national debt may lead to inflation






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






47. Money is at the root of aggregate demand






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