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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. Relation between inflation and unemployment






2. The budget must be balanced each year






3. The competition in the marketplace provides economic stability






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






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






6. 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






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






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






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






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






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






12. Encourage foreign investment






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






14. According to Keynesian theory - AS curve is __________






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






16. Relationship between inflation and unemployment






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






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






19. Fundamental equation of monetarism






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






21. The price level rises and money loses value






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






23. This consequence of national debt may lead to inflation






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






25. Basic Keynesian economic equation






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






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






28. One source of public debt






29. Accumulation of government deficits






30. Classical economists believe that the AS curve is _______






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






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






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






34. _________ will prefer to consume than to save






35. Money is at the root of aggregate demand






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






37. A sudden and drastic change in the supply curve






38. Inflation accompanied by simultaneous increases in prices and unemployment






39. Rational Expectations Theorists






40. 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






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






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






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






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






45. Inflation that results from an initial increase in costs






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






47. Keynesian economics believes that AD is ________






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