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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. 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