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






2. Relation between inflation and unemployment






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






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






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






6. 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






7. Encourage foreign investment






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






9. This consequence of national debt may lead to inflation






10. Money is at the root of aggregate demand






11. Basic Keynesian economic equation






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






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






14. Classical economists believe that the AS curve is _______






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






16. The budget must be balanced each year






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






18. Rational Expectations Theorists






19. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






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






24. Keynesian economics believes that AD is ________






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






26. A sudden and drastic change in the supply curve






27. 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






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






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






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






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






32. Accumulation of government deficits






33. The competition in the marketplace provides economic stability






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






35. _________ will prefer to consume than to save






36. Inflation that results from an initial increase in costs






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






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






39. One source of public debt






40. Fundamental equation of monetarism






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






42. The price level rises and money loses value






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






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






45. Relationship between inflation and unemployment






46. According to Keynesian theory - AS curve is __________






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






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