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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 competition in the marketplace provides economic stability






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






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






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






5. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






8. 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






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






10. Inflation that results from an initial increase in costs






11. 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






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






13. Basic Keynesian economic equation






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






15. Rational Expectations Theorists






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






17. Accumulation of government deficits






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






19. According to Keynesian theory - AS curve is __________






20. Keynesian economics believes that AD is ________






21. A sudden and drastic change in the supply curve






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






23. Money is at the root of aggregate demand






24. Fundamental equation of monetarism






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






26. Relationship between inflation and unemployment






27. The price level rises and money loses value






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






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






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






31. The budget must be balanced each year






32. _________ will prefer to consume than to save






33. Relation between inflation and unemployment






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






35. Classical economists believe that the AS curve is _______






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






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






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






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






40. Encourage foreign investment






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






42. One source of public debt






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






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






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






46. This consequence of national debt may lead to inflation






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






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






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