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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. The price level rises and money loses value






3. Fundamental equation of monetarism






4. _________ will prefer to consume than to save






5. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






10. Basic Keynesian economic equation






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






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






13. Relation between inflation and unemployment






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






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






16. According to Keynesian theory - AS curve is __________






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






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






19. Accumulation of government deficits






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






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






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






23. Keynesian economics believes that AD is ________






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






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






26. Classical economists believe that the AS curve is _______






27. 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






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






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






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






31. Inflation that results from an initial increase in costs






32. Rational Expectations Theorists






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






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






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






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






37. The competition in the marketplace provides economic stability






38. Money is at the root of aggregate demand






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






40. 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






41. The budget must be balanced each year






42. Encourage foreign investment






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






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






45. This consequence of national debt may lead to inflation






46. A sudden and drastic change in the supply curve






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






48. Relationship between inflation and unemployment