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






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






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






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






5. _________ will prefer to consume than to save






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






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






8. This consequence of national debt may lead to inflation






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






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






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






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






13. Classical economists believe that the AS curve is _______






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






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






16. Money is at the root of aggregate demand






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






18. Basic Keynesian economic equation






19. The price level rises and money loses value






20. Inflation accompanied by simultaneous increases in prices and unemployment






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






22. One source of public debt






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






24. 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






25. A sudden and drastic change in the supply curve






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






27. 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






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






29. Relation between inflation and unemployment






30. Inflation that results from an initial increase in costs






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






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






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






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






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






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






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






38. Encourage foreign investment






39. The competition in the marketplace provides economic stability






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






41. According to Keynesian theory - AS curve is __________






42. The budget must be balanced each year






43. Keynesian economics believes that AD is ________






44. Accumulation of government deficits






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






46. Fundamental equation of monetarism






47. Rational Expectations Theorists






48. Relationship between inflation and unemployment