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






2. Accumulation of government deficits






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






4. The price level rises and money loses value






5. 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






6. The competition in the marketplace provides economic stability






7. Relation between inflation and unemployment






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






9. According to Keynesian theory - AS curve is __________






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






11. Encourage foreign investment






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






13. The budget must be balanced each year






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






15. One source of public debt






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






17. Rational Expectations Theorists






18. Relationship between inflation and unemployment






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






20. Money is at the root of aggregate demand






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






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






23. Inflation accompanied by simultaneous increases in prices and unemployment






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






25. This consequence of national debt may lead to inflation






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






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






28. Keynesian economics believes that AD is ________






29. Basic Keynesian economic equation






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






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






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






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






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






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






36. _________ will prefer to consume than to save






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






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






39. Classical economists believe that the AS curve is _______






40. 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






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






42. Fundamental equation of monetarism






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






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






45. Inflation that results from an initial increase in costs






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






47. A sudden and drastic change in the supply curve






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






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