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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. Relationship between inflation and unemployment






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






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






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






5. The budget must be balanced each year






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






7. According to Keynesian theory - AS curve is __________






8. Accumulation of government deficits






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






10. The competition in the marketplace provides economic stability






11. Inflation that results from an initial increase in costs






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






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






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






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






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






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






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






19. Money is at the root of aggregate demand






20. Fundamental equation of monetarism






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






22. Encourage foreign investment






23. Relation between inflation and unemployment






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






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






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






27. Rational Expectations Theorists






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






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






30. The price level rises and money loses value






31. 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






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






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






34. A sudden and drastic change in the supply curve






35. Basic Keynesian economic equation






36. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






39. Classical economists believe that the AS curve is _______






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






41. 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






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






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






44. This consequence of national debt may lead to inflation






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






46. _________ will prefer to consume than to save






47. One source of public debt






48. Keynesian economics believes that AD is ________