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






2. 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






3. Accumulation of government deficits






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






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






6. A sudden and drastic change in the supply curve






7. This consequence of national debt may lead to inflation






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






9. Encourage foreign investment






10. Rational Expectations Theorists






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






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






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






14. Basic Keynesian economic equation






15. The competition in the marketplace provides economic stability






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






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






18. Relation between inflation and unemployment






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






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






21. _________ will prefer to consume than to save






22. The budget must be balanced each year






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






24. Fundamental equation of monetarism






25. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






28. One source of public debt






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






30. Money is at the root of aggregate demand






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






32. Inflation that results from an initial increase in costs






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






34. Keynesian economics believes that AD is ________






35. According to Keynesian theory - AS curve is __________






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






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






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






39. 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






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






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






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






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






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






45. Classical economists believe that the AS curve is _______






46. The price level rises and money loses value






47. Relationship between inflation and unemployment






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