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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. This consequence of national debt may lead to inflation






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






3. Accumulation of government deficits






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






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






7. Relationship between inflation and unemployment






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






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






10. Rational Expectations Theorists






11. Money is at the root of aggregate demand






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






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






14. According to Keynesian theory - AS curve is __________






15. Classical economists believe that the AS curve is _______






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






17. Fundamental equation of monetarism






18. Keynesian economics believes that AD is ________






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






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






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






22. Inflation accompanied by simultaneous increases in prices and unemployment






23. _________ will prefer to consume than to save






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






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






26. One source of public debt






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






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






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






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






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






32. The price level rises and money loses value






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






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






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






36. The competition in the marketplace provides economic stability






37. 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






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






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






40. Basic Keynesian economic equation






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






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






43. The budget must be balanced each year






44. Relation between inflation and unemployment






45. Inflation that results from an initial increase in costs






46. A sudden and drastic change in the supply curve






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






48. Encourage foreign investment