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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. Classical economists believe that the AS curve is _______






2. 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






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






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






5. The competition in the marketplace provides economic stability






6. Relation between inflation and unemployment






7. The budget must be balanced each year






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






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






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






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






12. A sudden and drastic change in the supply curve






13. Inflation that results from an initial increase in costs






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






15. Money is at the root of aggregate demand






16. According to Keynesian theory - AS curve is __________






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. _________ will prefer to consume than to save






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






21. The price level rises and money loses value






22. One source of public debt






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






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






25. Accumulation of government deficits






26. Basic Keynesian economic equation






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






28. Rational Expectations Theorists






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






30. 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






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






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






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






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






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






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






37. Encourage foreign investment






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






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






40. Fundamental equation of monetarism






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






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






43. This consequence of national debt may lead to inflation






44. Inflation accompanied by simultaneous increases in prices and unemployment






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






46. Relationship between inflation and unemployment






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






48. Keynesian economics believes that AD is ________