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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
  • Answer 48 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. Inflation accompanied by simultaneous increases in prices and unemployment

2. The competition in the marketplace provides economic stability

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

4. 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

5. Relationship between inflation and unemployment

6. Fundamental equation of monetarism

7. A sudden and drastic change in the supply curve

8. Rational Expectations Theorists

9. Money is at the root of aggregate demand

10. 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

11. The price level rises and money loses value

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

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

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

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

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

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

18. Classical economists believe that the AS curve is _______

19. This consequence of national debt may lead to inflation

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

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

22. The budget must be balanced each year

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

24. _________ will prefer to consume than to save

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

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

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

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

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

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

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

32. According to Keynesian theory - AS curve is __________

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

34. Inflation that results from an initial increase in costs

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

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

37. Keynesian economics believes that AD is ________

38. Relation between inflation and unemployment

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

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

41. Accumulation of government deficits

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

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

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

45. Encourage foreign investment

46. One source of public debt

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

48. Basic Keynesian economic equation