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






2. Encourage foreign investment






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






4. Keynesian economics believes that AD is ________






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






6. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






9. The price level rises and money loses value






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






11. Classical economists believe that the AS curve is _______






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






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






14. Fundamental equation of monetarism






15. 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






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






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






18. Money is at the root of aggregate demand






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






20. According to Keynesian theory - AS curve is __________






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






22. This consequence of national debt may lead to inflation






23. Rational Expectations Theorists






24. The budget must be balanced each year






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






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






27. _________ will prefer to consume than to save






28. 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






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






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






31. Accumulation of government deficits






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






33. Relationship between inflation and unemployment






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






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






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






37. The competition in the marketplace provides economic stability






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






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






40. Basic Keynesian economic equation






41. Relation between inflation and unemployment






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






43. A sudden and drastic change in the supply curve






44. Inflation that results from an initial increase in costs






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






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






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






48. One source of public debt






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