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






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






3. Keynesian economics believes that AD is ________






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






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






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






7. Accumulation of government deficits






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






9. Classical economists believe that the AS curve is _______






10. A sudden and drastic change in the supply curve






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






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






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






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






15. Relationship between inflation and unemployment






16. Inflation accompanied by simultaneous increases in prices and unemployment






17. Rational Expectations Theorists






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






19. The budget must be balanced each year






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






21. Relation between inflation and unemployment






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






23. _________ will prefer to consume than to save






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






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






26. The competition in the marketplace provides economic stability






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






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






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






30. Fundamental equation of monetarism






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






32. 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






33. One source of public debt






34. Money is at the root of aggregate demand






35. The price level rises and money loses value






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






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






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






39. According to Keynesian theory - AS curve is __________






40. This consequence of national debt may lead to inflation






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






42. Inflation that results from an initial increase in costs






43. Encourage foreign investment






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






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






46. 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






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






48. Basic Keynesian economic equation