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






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






3. One source of public debt






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






5. According to Keynesian theory - AS curve is __________






6. The competition in the marketplace provides economic stability






7. 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






8. Fundamental equation of monetarism






9. Relation between inflation and unemployment






10. Rational Expectations Theorists






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






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






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






14. The budget must be balanced each year






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






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






17. Accumulation of government deficits






18. 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






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






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






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






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






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






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






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






26. Keynesian economics believes that AD is ________






27. Basic Keynesian economic equation






28. _________ will prefer to consume than to save






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






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






31. The price level rises and money loses value






32. Relationship between inflation and unemployment






33. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






37. Encourage foreign investment






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






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






40. Inflation that results from an initial increase in costs






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






42. This consequence of national debt may lead to inflation






43. Classical economists believe that the AS curve is _______






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






45. A sudden and drastic change in the supply curve






46. Money is at the root of aggregate demand






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






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