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






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






3. Keynesian economics believes that AD is ________






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






5. 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






6. The competition in the marketplace provides economic stability






7. The price level rises and money loses value






8. Accumulation of government deficits






9. Classical economists believe that the AS curve is _______






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






11. Money is at the root of aggregate demand






12. This consequence of national debt may lead to inflation






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






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






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






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






17. One source of public debt






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






19. A sudden and drastic change in the supply curve






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






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






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






23. Inflation accompanied by simultaneous increases in prices and unemployment






24. The budget must be balanced each year






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






26. Encourage foreign investment






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






28. According to Keynesian theory - AS curve is __________






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






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






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






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






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






34. Basic Keynesian economic equation






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






36. Rational Expectations Theorists






37. 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






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






39. _________ will prefer to consume than to save






40. Relation between inflation and unemployment






41. Inflation that results from an initial increase in costs






42. Fundamental equation of monetarism






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






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






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






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






47. Relationship between inflation and unemployment






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