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






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






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






4. Accumulation of government deficits






5. This consequence of national debt may lead to inflation






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






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






8. The budget must be balanced each year






9. Rational Expectations Theorists






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






11. Fundamental equation of monetarism






12. Relation between inflation and unemployment






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






14. _________ will prefer to consume than to save






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






16. According to Keynesian theory - AS curve is __________






17. Money is at the root of aggregate demand






18. Keynesian economics believes that AD is ________






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






20. The price level rises and money loses value






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






22. 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






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






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






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






26. Inflation that results from an initial increase in costs






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






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






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






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






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






32. The competition in the marketplace provides economic stability






33. Relationship between inflation and unemployment






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






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






36. A sudden and drastic change in the supply curve






37. Basic Keynesian economic equation






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






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






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






41. Classical economists believe that the AS curve is _______






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






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






44. Encourage foreign investment






45. 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






46. Inflation accompanied by simultaneous increases in prices and unemployment






47. One source of public debt






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