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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. A sudden and drastic change in the supply curve






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






3. Money is at the root of aggregate demand






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






5. This consequence of national debt may lead to inflation






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






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






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






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






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






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






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






13. Classical economists believe that the AS curve is _______






14. Relationship between inflation and unemployment






15. The price level rises and money loses value






16. Accumulation of government deficits






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






18. The competition in the marketplace provides economic stability






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






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






21. 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






22. Inflation accompanied by simultaneous increases in prices and unemployment






23. The budget must be balanced each year






24. Relation between inflation and unemployment






25. Inflation that results from an initial increase in costs






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






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






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






29. Basic Keynesian economic equation






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






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






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






33. Rational Expectations Theorists






34. 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






35. Encourage foreign investment






36. According to Keynesian theory - AS curve is __________






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






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






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






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






41. Fundamental equation of monetarism






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






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






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






45. _________ will prefer to consume than to save






46. Keynesian economics believes that AD is ________






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






48. One source of public debt






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