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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. Keynesian economics believes that AD is ________






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






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






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






5. Classical economists believe that the AS curve is _______






6. The price level rises and money loses value






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






8. 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






9. Encourage foreign investment






10. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






14. Accumulation of government deficits






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






16. Rational Expectations Theorists






17. Money is at the root of aggregate demand






18. Basic Keynesian economic equation






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






20. This consequence of national debt may lead to inflation






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






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






23. A sudden and drastic change in the supply curve






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






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






26. Relation between inflation and unemployment






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






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






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






30. Inflation that results from an initial increase in costs






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






32. 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






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






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






35. The budget must be balanced each year






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






37. _________ will prefer to consume than to save






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






39. Fundamental equation of monetarism






40. The competition in the marketplace provides economic stability






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






42. Relationship between inflation and unemployment






43. One source of public debt






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






45. According to Keynesian theory - AS curve is __________






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






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






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