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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. One source of public debt






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






3. The budget must be balanced each year






4. Money is at the root of aggregate demand






5. Relation between inflation and unemployment






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






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






8. This consequence of national debt may lead to inflation






9. Fundamental equation of monetarism






10. Basic Keynesian economic equation






11. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






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






17. Encourage foreign investment






18. Rational Expectations Theorists






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






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






21. Keynesian economics believes that AD is ________






22. Relationship between inflation and unemployment






23. 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






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






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






26. _________ will prefer to consume than to save






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






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






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






30. Inflation that results from an initial increase in costs






31. Classical economists believe that the AS curve is _______






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






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






34. Accumulation of government deficits






35. The price level rises and money loses value






36. A sudden and drastic change in the supply curve






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






38. The competition in the marketplace provides economic stability






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






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






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






42. According to Keynesian theory - AS curve is __________






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






44. 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






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






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






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






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