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






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






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






5. 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






6. Inflation accompanied by simultaneous increases in prices and unemployment






7. One source of public debt






8. Keynesian economics believes that AD is ________






9. Rational Expectations Theorists






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






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






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






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






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






15. _________ will prefer to consume than to save






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






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






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






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






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






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






22. A sudden and drastic change in the supply curve






23. Inflation that results from an initial increase in costs






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






25. Encourage foreign investment






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






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






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






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






30. 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






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






32. The budget must be balanced each year






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






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






35. Fundamental equation of monetarism






36. This consequence of national debt may lead to inflation






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






38. According to Keynesian theory - AS curve is __________






39. Accumulation of government deficits






40. Basic Keynesian economic equation






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






42. Money is at the root of aggregate demand






43. Relation between inflation and unemployment






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






45. Classical economists believe that the AS curve is _______






46. The price level rises and money loses value






47. The competition in the marketplace provides economic stability






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