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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. This consequence of national debt may lead to inflation






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






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






4. 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






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






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






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






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






9. _________ will prefer to consume than to save






10. Relationship between inflation and unemployment






11. Encourage foreign investment






12. Basic Keynesian economic equation






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






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






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






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






18. The price level rises and money loses value






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






20. Accumulation of government deficits






21. Money is at the root of aggregate demand






22. Rational Expectations Theorists






23. Inflation accompanied by simultaneous increases in prices and unemployment






24. Inflation that results from an initial increase in costs






25. The budget must be balanced each year






26. The competition in the marketplace provides economic stability






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






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






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






30. According to Keynesian theory - AS curve is __________






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






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






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






34. Relation between inflation and unemployment






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






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






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






38. A sudden and drastic change in the supply curve






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






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






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






42. Classical economists believe that the AS curve is _______






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






44. One source of public debt






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






46. Keynesian economics believes that AD is ________






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






48. Fundamental equation of monetarism