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






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






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






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






5. Encourage foreign investment






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






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






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






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






10. Inflation that results from an initial increase in costs






11. Money is at the root of aggregate demand






12. 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






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






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






15. Basic Keynesian economic equation






16. The competition in the marketplace provides economic stability






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






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






19. Relationship between inflation and unemployment






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






21. The price level rises and money loses value






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






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






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






26. Rational Expectations Theorists






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






28. One source of public debt






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






30. Accumulation of government deficits






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






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






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






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






35. The budget must be balanced each year






36. Relation between inflation and unemployment






37. According to Keynesian theory - AS curve is __________






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






39. Classical economists believe that the AS curve is _______






40. _________ will prefer to consume than to save






41. Fundamental equation of monetarism






42. Keynesian economics believes that AD is ________






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






44. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






47. A sudden and drastic change in the supply curve






48. This consequence of national debt may lead to inflation