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






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






4. Basic Keynesian economic equation






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






6. According to Keynesian theory - AS curve is __________






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






8. Fundamental equation of monetarism






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






10. Inflation that results from an initial increase in costs






11. Keynesian economics believes that AD is ________






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






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






14. The budget must be balanced each year






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






16. This consequence of national debt may lead to inflation






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






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






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






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






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






22. 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






23. Relationship between inflation and unemployment






24. Rational Expectations Theorists






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






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






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






28. Accumulation of government deficits






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






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






31. Inflation accompanied by simultaneous increases in prices and unemployment






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






33. 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






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






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






36. A sudden and drastic change in the supply curve






37. _________ will prefer to consume than to save






38. Money is at the root of aggregate demand






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






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






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






42. Encourage foreign investment






43. Classical economists believe that the AS curve is _______






44. Relation between inflation and unemployment






45. The price level rises and money loses value






46. The competition in the marketplace provides economic stability






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






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