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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 20 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. Using taxes and spending to influence the level of GDP in the short run






2. _________ will prefer to consume than to save






3. Classical economists believe that the AS curve is _______






4. One source of public debt






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






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






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






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






9. 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






10. Inflation that results from an initial increase in costs






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






12. Keynesian economics believes that AD is ________






13. Encourage foreign investment






14. Accumulation of government deficits






15. Rational Expectations Theorists






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






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






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






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






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






22. The price level rises and money loses value






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






24. Inflation accompanied by simultaneous increases in prices and unemployment






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






26. The competition in the marketplace provides economic stability






27. A sudden and drastic change in the supply curve






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






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






30. Relation between inflation and unemployment






31. Fundamental equation of monetarism






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






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






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






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






36. This consequence of national debt may lead to inflation






37. According to Keynesian theory - AS curve is __________






38. The budget must be balanced each year






39. Basic Keynesian economic equation






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






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






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






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






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






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






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






47. Relationship between inflation and unemployment






48. Money is at the root of aggregate demand