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






2. Keynesian economics believes that AD is ________






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






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






5. The budget must be balanced each year






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






7. Money is at the root of aggregate demand






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






9. Rational Expectations Theorists






10. Basic Keynesian economic equation






11. Inflation that results from an initial increase in costs






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






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






14. This consequence of national debt may lead to inflation






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






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






17. Relationship between inflation and unemployment






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






19. A sudden and drastic change in the supply curve






20. Classical economists believe that the AS curve is _______






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






22. According to Keynesian theory - AS curve is __________






23. Relation between inflation and unemployment






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






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






26. The price level rises and money loses value






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






28. _________ will prefer to consume than to save






29. 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






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






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






32. Fundamental equation of monetarism






33. One source of public debt






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






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






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






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






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






39. 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






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






41. The competition in the marketplace provides economic stability






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






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






44. Encourage foreign investment






45. Inflation accompanied by simultaneous increases in prices and unemployment






46. Accumulation of government deficits






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






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