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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. Keynesian economics believes that AD is ________






2. The price level rises and money loses value






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






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






5. _________ will prefer to consume than to save






6. Money is at the root of aggregate demand






7. Rational Expectations Theorists






8. Accumulation of government deficits






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






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






11. Relationship between inflation and unemployment






12. 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






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






14. A sudden and drastic change in the supply curve






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






16. One source of public debt






17. This consequence of national debt may lead to inflation






18. 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






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






20. Encourage foreign investment






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






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






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






24. Fundamental equation of monetarism






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






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






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






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






29. Inflation that results from an initial increase in costs






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






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






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






33. Classical economists believe that the AS curve is _______






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






35. The competition in the marketplace provides economic stability






36. Relation between inflation and unemployment






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






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






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






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






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






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






43. Basic Keynesian economic equation






44. Inflation accompanied by simultaneous increases in prices and unemployment






45. According to Keynesian theory - AS curve is __________






46. The budget must be balanced each year






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






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