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






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






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






5. Inflation that results from an initial increase in costs






6. _________ will prefer to consume than to save






7. A sudden and drastic change in the supply curve






8. This consequence of national debt may lead to inflation






9. The budget must be balanced each year






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






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






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






13. 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






14. Rational Expectations Theorists






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






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






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






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






19. Inflation accompanied by simultaneous increases in prices and unemployment






20. Basic Keynesian economic equation






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






22. Keynesian economics believes that AD is ________






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






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






25. According to Keynesian theory - AS curve is __________






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






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






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






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






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






31. Classical economists believe that the AS curve is _______






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






33. The competition in the marketplace provides economic stability






34. The price level rises and money loses value






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






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






37. 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






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






39. Money is at the root of aggregate demand






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






41. Relationship between inflation and unemployment






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






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






44. Accumulation of government deficits






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






46. Encourage foreign investment






47. Fundamental equation of monetarism






48. Relation between inflation and unemployment