Test your basic knowledge |

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. Relationship between inflation and unemployment






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






3. 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






4. Accumulation of government deficits






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






6. Encourage foreign investment






7. Classical economists believe that the AS curve is _______






8. A sudden and drastic change in the supply curve






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






10. Inflation that results from an initial increase in costs






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






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






13. 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






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






15. This consequence of national debt may lead to inflation






16. Fundamental equation of monetarism






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






18. Inflation accompanied by simultaneous increases in prices and unemployment






19. Keynesian economics believes that AD is ________






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






21. The budget must be balanced each year






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






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






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






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






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






27. Rational Expectations Theorists






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






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






30. Basic Keynesian economic equation






31. Money is at the root of aggregate demand






32. The price level rises and money loses value






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






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






35. According to Keynesian theory - AS curve is __________






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






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






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






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






40. _________ will prefer to consume than to save






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






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






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






44. One source of public debt






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






46. The competition in the marketplace provides economic stability






47. Relation between inflation and unemployment






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