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






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






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






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






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






6. _________ will prefer to consume than to save






7. The budget must be balanced each year






8. The competition in the marketplace provides economic stability






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






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






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






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






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






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






15. Classical economists believe that the AS curve is _______






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






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






18. Basic Keynesian economic equation






19. 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






20. Inflation that results from an initial increase in costs






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






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






23. Encourage foreign investment






24. The price level rises and money loses value






25. 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






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






27. Money is at the root of aggregate demand






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






29. This consequence of national debt may lead to inflation






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






31. Accumulation of government deficits






32. Fundamental equation of monetarism






33. Relationship between inflation and unemployment






34. One source of public debt






35. Inflation accompanied by simultaneous increases in prices and unemployment






36. Keynesian economics believes that AD is ________






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






38. Relation between inflation and unemployment






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






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






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






42. Rational Expectations Theorists






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






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






45. According to Keynesian theory - AS curve is __________






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






47. A sudden and drastic change in the supply curve






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