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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. Classical economists believe that the AS curve is _______






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






3. 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






4. 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






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






6. Inflation accompanied by simultaneous increases in prices and unemployment






7. Relation between inflation and unemployment






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






9. Rational Expectations Theorists






10. According to Keynesian theory - AS curve is __________






11. Encourage foreign investment






12. This consequence of national debt may lead to inflation






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






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






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






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






17. Inflation that results from an initial increase in costs






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






19. Money is at the root of aggregate demand






20. The competition in the marketplace provides economic stability






21. The budget must be balanced each year






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






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






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






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






26. A sudden and drastic change in the supply curve






27. Relationship between inflation and unemployment






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






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






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






31. Accumulation of government deficits






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






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






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






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






36. Fundamental equation of monetarism






37. _________ will prefer to consume than to save






38. Basic Keynesian economic equation






39. Keynesian economics believes that AD is ________






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






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






42. The price level rises and money loses value






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






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






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






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






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






48. One source of public debt