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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 30 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. Balancing the budget is secondary to ensuring that the economy runs at a non-inflationary full employment level






2. Accumulation of government deficits






3. The price level rises and money loses value






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






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






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






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






8. Money is at the root of aggregate demand






9. The competition in the marketplace provides economic stability






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






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






12. This consequence of national debt may lead to inflation






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






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






15. 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






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






17. Rational Expectations Theorists






18. Classical economists believe that the AS curve is _______






19. Keynesian economics believes that AD is ________






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






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






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






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






24. _________ will prefer to consume than to save






25. Encourage foreign investment






26. The budget must be balanced each year






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






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






29. Basic Keynesian economic equation






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






31. Relationship between inflation and unemployment






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






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






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






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






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






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






38. Inflation accompanied by simultaneous increases in prices and unemployment






39. Relation between inflation and unemployment






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






41. A sudden and drastic change in the supply curve






42. One source of public debt






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






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






45. Fundamental equation of monetarism






46. According to Keynesian theory - AS curve is __________






47. Inflation that results from an initial increase in costs






48. 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






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