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






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






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






4. Inflation that results from an initial increase in costs






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






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






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






8. Keynesian economics believes that AD is ________






9. This consequence of national debt may lead to inflation






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






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






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






13. Encourage foreign investment






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






15. Basic Keynesian economic equation






16. 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






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






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






19. Money is at the root of aggregate demand






20. The price level rises and money loses value






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






22. Relationship between inflation and unemployment






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






24. Inflation accompanied by simultaneous increases in prices and unemployment






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






26. Rational Expectations Theorists






27. 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






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






29. Accumulation of government deficits






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






31. One source of public debt






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






33. A sudden and drastic change in the supply curve






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






37. According to Keynesian theory - AS curve is __________






38. _________ will prefer to consume than to save






39. Classical economists believe that the AS curve is _______






40. The budget must be balanced each year






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






42. Fundamental equation of monetarism






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






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






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






46. The competition in the marketplace provides economic stability






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






48. Relation between inflation and unemployment