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






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






3. Inflation that results from an initial increase in costs






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






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






6. One source of public debt






7. Fundamental equation of monetarism






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






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






10. 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






11. Classical economists believe that the AS curve is _______






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






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






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






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






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






17. Relationship between inflation and unemployment






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






19. 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






20. Accumulation of government deficits






21. Encourage foreign investment






22. The competition in the marketplace provides economic stability






23. The budget must be balanced each year






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






25. Relation between inflation and unemployment






26. Money is at the root of aggregate demand






27. _________ will prefer to consume than to save






28. According to Keynesian theory - AS curve is __________






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






30. This consequence of national debt may lead to inflation






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






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






33. Inflation accompanied by simultaneous increases in prices and unemployment






34. Rational Expectations Theorists






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






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






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






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






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






40. The price level rises and money loses value






41. Keynesian economics believes that AD is ________






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






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






44. A sudden and drastic change in the supply curve






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






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






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






48. Basic Keynesian economic equation