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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. Encourage foreign investment






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






3. Money is at the root of aggregate demand






4. Accumulation of government deficits






5. The budget must be balanced each year






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






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






8. The competition in the marketplace provides economic stability






9. Relation between inflation and unemployment






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






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






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






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






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






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






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






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






18. According to Keynesian theory - AS curve is __________






19. 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






20. The price level rises and money loses value






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






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






23. Keynesian economics believes that AD is ________






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






25. _________ will prefer to consume than to save






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






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






28. This consequence of national debt may lead to inflation






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






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






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






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. Rational Expectations Theorists






34. One source of public debt






35. Relationship between inflation and unemployment






36. Inflation accompanied by simultaneous increases in prices and unemployment






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






38. A sudden and drastic change in the supply curve






39. Basic Keynesian economic equation






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






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






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






43. Classical economists believe that the AS curve is _______






44. Inflation that results from an initial increase in costs






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






46. Fundamental equation of monetarism






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






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