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






2. _________ will prefer to consume than to save






3. A sudden and drastic change in the supply curve






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






5. Keynesian economics believes that AD is ________






6. The budget must be balanced each year






7. Fundamental equation of monetarism






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






9. One source of public debt






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






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






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






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






14. Relationship between inflation and unemployment






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






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






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






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






19. The competition in the marketplace provides economic stability






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






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






22. 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






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






24. The price level rises and money loses value






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






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






27. Encourage foreign investment






28. Accumulation of government deficits






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






30. Rational Expectations Theorists






31. Classical economists believe that the AS curve is _______






32. Money is at the root of aggregate demand






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






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






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






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






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






38. Inflation that results from an initial increase in costs






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






40. This consequence of national debt may lead to inflation






41. Relation between inflation and unemployment






42. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






45. Basic Keynesian economic equation






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






47. 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






48. According to Keynesian theory - AS curve is __________