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






2. Relation between inflation and unemployment






3. The competition in the marketplace provides economic stability






4. 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






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






6. According to Keynesian theory - AS curve is __________






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






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






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






10. This consequence of national debt may lead to inflation






11. _________ will prefer to consume than to save






12. Basic Keynesian economic equation






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






14. Encourage foreign investment






15. One source of public debt






16. Inflation accompanied by simultaneous increases in prices and unemployment






17. Relationship between inflation and unemployment






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






19. Classical economists believe that the AS curve is _______






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






21. Accumulation of government deficits






22. The budget must be balanced each year






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






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






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






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






27. Keynesian economics believes that AD is ________






28. A sudden and drastic change in the supply curve






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






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






31. Rational Expectations Theorists






32. Fundamental equation of monetarism






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






34. Inflation that results from an initial increase in costs






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






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






37. The price level rises and money loses value






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






39. Money is at the root of aggregate demand






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






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






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






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






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






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






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






47. 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






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