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






2. The price level rises and money loses value






3. A sudden and drastic change in the supply curve






4. 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






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






6. Classical economists believe that the AS curve is _______






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






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






9. This consequence of national debt may lead to inflation






10. 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






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






12. Relation between inflation and unemployment






13. Money is at the root of aggregate demand






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






15. Keynesian economics believes that AD is ________






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






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






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






19. Relationship between inflation and unemployment






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






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






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






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






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






25. The competition in the marketplace provides economic stability






26. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






31. Accumulation of government deficits






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






33. Basic Keynesian economic equation






34. _________ will prefer to consume than to save






35. Encourage foreign investment






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






37. Inflation that results from an initial increase in costs






38. According to Keynesian theory - AS curve is __________






39. The budget must be balanced each year






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






41. Rational Expectations Theorists






42. Fundamental equation of monetarism






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






44. One source of public debt






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






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






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






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