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






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






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






4. The price level rises and money loses value






5. Rational Expectations Theorists






6. Relationship between inflation and unemployment






7. Money is at the root of aggregate demand






8. Classical economists believe that the AS curve is _______






9. One source of public debt






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






11. Accumulation of government deficits






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






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






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






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






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






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






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






19. Inflation that results from an initial increase in costs






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






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






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






23. Keynesian economics believes that AD is ________






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






25. The budget must be balanced each year






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






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






28. The competition in the marketplace provides economic stability






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






30. Encourage foreign investment






31. Fundamental equation of monetarism






32. _________ will prefer to consume than to save






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






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






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






36. This consequence of national debt may lead to inflation






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






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






39. Inflation accompanied by simultaneous increases in prices and unemployment






40. Basic Keynesian economic equation






41. According to Keynesian theory - AS curve is __________






42. A sudden and drastic change in the supply curve






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






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






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






46. 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






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. Relation between inflation and unemployment