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






3. The budget must be balanced each year






4. Money is at the root of aggregate demand






5. The competition in the marketplace provides economic stability






6. 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






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






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






9. Keynesian economics believes that AD is ________






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






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






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






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






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






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






16. Basic Keynesian economic equation






17. Classical economists believe that the AS curve is _______






18. Fundamental equation of monetarism






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






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






21. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






25. 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






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






27. One source of public debt






28. Relation between inflation and unemployment






29. According to Keynesian theory - AS curve is __________






30. _________ will prefer to consume than to save






31. Rational Expectations Theorists






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






33. This consequence of national debt may lead to inflation






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






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






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






37. A sudden and drastic change in the supply curve






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






39. Relationship between inflation and unemployment






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






41. Encourage foreign investment






42. Inflation that results from an initial increase in costs






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






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






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






46. The price level rises and money loses value






47. Accumulation of government deficits






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