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






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






3. Rational Expectations Theorists






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






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






6. Basic Keynesian economic equation






7. Classical economists believe that the AS curve is _______






8. One source of public debt






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






10. Inflation accompanied by simultaneous increases in prices and unemployment






11. This consequence of national debt may lead to inflation






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






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






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






15. 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






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






17. Keynesian economics believes that AD is ________






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






19. Money is at the root of aggregate demand






20. 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






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






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






23. Relation between inflation and unemployment






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






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






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






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






28. The competition in the marketplace provides economic stability






29. The price level rises and money loses value






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






31. Relationship between inflation and unemployment






32. Accumulation of government deficits






33. Fundamental equation of monetarism






34. According to Keynesian theory - AS curve is __________






35. A sudden and drastic change in the supply curve






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






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






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






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






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






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






42. The budget must be balanced each year






43. Inflation that results from an initial increase in costs






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






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






46. Encourage foreign investment






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






48. _________ will prefer to consume than to save