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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. Rational Expectations Theorists






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






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






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






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






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






8. According to Keynesian theory - AS curve is __________






9. _________ will prefer to consume than to save






10. Classical economists believe that the AS curve is _______






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






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






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






14. Encourage foreign investment






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






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






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






18. Relationship between inflation and unemployment






19. The price level rises and money loses value






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






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






22. Accumulation of government deficits






23. A sudden and drastic change in the supply curve






24. One source of public debt






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






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






27. Inflation that results from an initial increase in costs






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






29. 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






30. The competition in the marketplace provides economic stability






31. The budget must be balanced each year






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






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






34. Fundamental equation of monetarism






35. Relation between inflation and unemployment






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






37. 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






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






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






40. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






43. Basic Keynesian economic equation






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






45. Money is at the root of aggregate demand






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






47. This consequence of national debt may lead to inflation






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