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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 RET - cost of this depends on whether or not it is expected






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






3. Money is at the root of aggregate demand






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






5. Keynesian economics believes that AD is ________






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






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






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






9. Basic Keynesian economic equation






10. According to Keynesian theory - AS curve is __________






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






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






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






14. Rational Expectations Theorists






15. The price level rises and money loses value






16. The budget must be balanced each year






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






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






19. This consequence of national debt may lead to inflation






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






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






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






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






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






25. The competition in the marketplace provides economic stability






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






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






28. _________ will prefer to consume than to save






29. Relationship between inflation and unemployment






30. Classical economists believe that the AS curve is _______






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






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






33. A sudden and drastic change in the supply curve






34. 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






35. 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






36. One source of public debt






37. Relation between inflation and unemployment






38. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






42. Encourage foreign investment






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






44. Accumulation of government deficits






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






46. Fundamental equation of monetarism






47. Inflation that results from an initial increase in costs






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