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






2. Fundamental equation of monetarism






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






4. The competition in the marketplace provides economic stability






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






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






7. Encourage foreign investment






8. _________ will prefer to consume than to save






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






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






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






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






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






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






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






16. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






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






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






23. A sudden and drastic change in the supply curve






24. Relation between inflation and unemployment






25. Rational Expectations Theorists






26. The budget must be balanced each year






27. Accumulation of government deficits






28. According to Keynesian theory - AS curve is __________






29. Classical economists believe that the AS curve is _______






30. The price level rises and money loses value






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






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






33. This consequence of national debt may lead to inflation






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






35. Money is at the root of aggregate demand






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






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






38. Relationship between inflation and unemployment






39. Basic Keynesian economic equation






40. Inflation that results from an initial increase in costs






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






42. 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






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






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. One source of public debt






46. Keynesian economics believes that AD is ________






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






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