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






2. The competition in the marketplace provides economic stability






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






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






5. The price level rises and money loses value






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






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






8. Keynesian economics believes that AD is ________






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






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






11. The budget must be balanced each year






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






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






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






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






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






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






18. Rational Expectations Theorists






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






20. _________ will prefer to consume than to save






21. Encourage foreign investment






22. Money is at the root of aggregate demand






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






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






25. According to Keynesian theory - AS curve is __________






26. Relationship between inflation and unemployment






27. This consequence of national debt may lead to inflation






28. Accumulation of government deficits






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






30. 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






31. One source of public debt






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






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






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






35. Fundamental equation of monetarism






36. 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






37. Inflation accompanied by simultaneous increases in prices and unemployment






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






39. Classical economists believe that the AS curve is _______






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






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






42. Basic Keynesian economic equation






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






44. Inflation that results from an initial increase in costs






45. A sudden and drastic change in the supply curve






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






47. Relation between inflation and unemployment






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