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






2. According to Keynesian theory - AS curve is __________






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






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






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






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






7. Money is at the root of aggregate demand






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






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






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






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






12. Basic Keynesian economic equation






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






14. The competition in the marketplace provides economic stability






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






16. Relation between inflation and unemployment






17. Relationship between inflation and unemployment






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






19. _________ will prefer to consume than to save






20. One source of public debt






21. The price level rises and money loses value






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






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






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






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






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






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






28. Keynesian economics believes that AD is ________






29. Classical economists believe that the AS curve is _______






30. Rational Expectations Theorists






31. The budget must be balanced each year






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






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






34. Fundamental equation of monetarism






35. 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






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






37. 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






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






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






40. This consequence of national debt may lead to inflation






41. Inflation accompanied by simultaneous increases in prices and unemployment






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






43. Inflation that results from an initial increase in costs






44. A sudden and drastic change in the supply curve






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






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






47. Accumulation of government deficits






48. Encourage foreign investment