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






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






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






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






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






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






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






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






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






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






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






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






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






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






15. One source of public debt






16. Inflation that results from an initial increase in costs






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






18. The price level rises and money loses value






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






20. The budget must be balanced each year






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






22. Money is at the root of aggregate demand






23. Inflation accompanied by simultaneous increases in prices and unemployment






24. 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






25. Basic Keynesian economic equation






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






27. Fundamental equation of monetarism






28. A sudden and drastic change in the supply curve






29. Keynesian economics believes that AD is ________






30. 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






31. Accumulation of government deficits






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






33. According to Keynesian theory - AS curve is __________






34. Relation between inflation and unemployment






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






36. _________ will prefer to consume than to save






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






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






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






40. Encourage foreign investment






41. The competition in the marketplace provides economic stability






42. This consequence of national debt may lead to inflation






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






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






45. Rational Expectations Theorists






46. Classical economists believe that the AS curve is _______






47. Relationship between inflation and unemployment






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