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






2. One source of public debt






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






4. Basic Keynesian economic equation






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






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






7. Keynesian economics believes that AD is ________






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






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






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






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






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






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






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






15. The budget must be balanced each year






16. 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






17. Money is at the root of aggregate demand






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






19. The price level rises and money loses value






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






21. Inflation accompanied by simultaneous increases in prices and unemployment






22. Classical economists believe that the AS curve is _______






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






24. Relation between inflation and unemployment






25. Encourage foreign investment






26. Accumulation of government deficits






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






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






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






30. Relationship between inflation and unemployment






31. According to Keynesian theory - AS curve is __________






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






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






34. This consequence of national debt may lead to inflation






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






36. Fundamental equation of monetarism






37. Rational Expectations Theorists






38. A sudden and drastic change in the supply curve






39. The competition in the marketplace provides economic stability






40. Inflation that results from an initial increase in costs






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






42. 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






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






44. _________ will prefer to consume than to save






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






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






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






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