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






2. The budget must be balanced each year






3. Encourage foreign investment






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






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






6. 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






7. One source of public debt






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






9. Basic Keynesian economic equation






10. A sudden and drastic change in the supply curve






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






12. Relationship between inflation and unemployment






13. Classical economists believe that the AS curve is _______






14. Fundamental equation of monetarism






15. Inflation accompanied by simultaneous increases in prices and unemployment






16. Accumulation of government deficits






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






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






19. Rational Expectations Theorists






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






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






22. According to Keynesian theory - AS curve is __________






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






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






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






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






27. The competition in the marketplace provides economic stability






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






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






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






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






32. 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






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






34. The price level rises and money loses value






35. Inflation that results from an initial increase in costs






36. Relation between inflation and unemployment






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






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






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






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






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






42. This consequence of national debt may lead to inflation






43. Keynesian economics believes that AD is ________






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






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






46. _________ will prefer to consume than to save






47. Money is at the root of aggregate demand






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