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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. Fundamental equation of monetarism






2. The price level rises and money loses value






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






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






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






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






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






8. Accumulation of government deficits






9. A sudden and drastic change in the supply curve






10. Keynesian economics believes that AD is ________






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






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






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






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






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






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






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






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






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






20. _________ will prefer to consume than to save






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






22. This consequence of national debt may lead to inflation






23. 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






24. Rational Expectations Theorists






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






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






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






28. Encourage foreign investment






29. According to Keynesian theory - AS curve is __________






30. Inflation accompanied by simultaneous increases in prices and unemployment






31. The competition in the marketplace provides economic stability






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






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






34. Basic Keynesian economic equation






35. The budget must be balanced each year






36. 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






37. Money is at the root of aggregate demand






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






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






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






41. Inflation that results from an initial increase in costs






42. Relationship between inflation and unemployment






43. One source of public debt






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






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






46. Classical economists believe that the AS curve is _______






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






48. Relation between inflation and unemployment






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