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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. Money is at the root of aggregate demand






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






3. Accumulation of government deficits






4. Relation between inflation and unemployment






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






6. Encourage foreign investment






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






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






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






10. Relationship between inflation and unemployment






11. According to Keynesian theory - AS curve is __________






12. 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






13. _________ will prefer to consume than to save






14. Rational Expectations Theorists






15. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






18. The competition in the marketplace provides economic stability






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






20. This consequence of national debt may lead to inflation






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






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






23. The budget must be balanced each year






24. 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






25. A sudden and drastic change in the supply curve






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






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






28. Basic Keynesian economic equation






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






30. Classical economists believe that the AS curve is _______






31. One source of public debt






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






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






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






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






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






37. Fundamental equation of monetarism






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






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






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






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






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






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






44. Keynesian economics believes that AD is ________






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






46. Inflation that results from an initial increase in costs






47. The price level rises and money loses value






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