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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. Accumulation of government deficits






2. Relationship between inflation and unemployment






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






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






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. A sudden and drastic change in the supply curve






7. Basic Keynesian economic equation






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






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






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






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






12. Fundamental equation of monetarism






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






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






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






16. The competition in the marketplace provides economic stability






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






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






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






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






21. Encourage foreign investment






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






23. Classical economists believe that the AS curve is _______






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






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






26. According to Keynesian theory - AS curve is __________






27. One source of public debt






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






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






30. Money is at the root of aggregate demand






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






32. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






37. This consequence of national debt may lead to inflation






38. Relation between inflation and unemployment






39. 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






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






41. The price level rises and money loses value






42. Inflation that results from an initial increase in costs






43. _________ will prefer to consume than to save






44. Keynesian economics believes that AD is ________






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






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






47. Rational Expectations Theorists






48. The budget must be balanced each year