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






2. _________ will prefer to consume than to save






3. Inflation accompanied by simultaneous increases in prices and unemployment






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






5. Fundamental equation of monetarism






6. Encourage foreign investment






7. 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






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






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






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






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






12. Relationship between inflation and unemployment






13. Inflation that results from an initial increase in costs






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






15. Classical economists believe that the AS curve is _______






16. Rational Expectations Theorists






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






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






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






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






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






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






23. Keynesian economics believes that AD is ________






24. Money is at the root of aggregate demand






25. The price level rises and money loses value






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






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






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






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






30. The budget must be balanced each year






31. 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






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






33. Basic Keynesian economic equation






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






35. Accumulation of government deficits






36. This consequence of national debt may lead to inflation






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






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






39. According to Keynesian theory - AS curve is __________






40. One source of public debt






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






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






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






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






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






46. A sudden and drastic change in the supply curve






47. Relation between inflation and unemployment






48. The competition in the marketplace provides economic stability