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






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






3. Money is at the root of aggregate demand






4. The price level rises and money loses value






5. This consequence of national debt may lead to inflation






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






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






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






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






10. Fundamental equation of monetarism






11. Rational Expectations Theorists






12. 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






13. Inflation accompanied by simultaneous increases in prices and unemployment






14. Basic Keynesian economic equation






15. A sudden and drastic change in the supply curve






16. Keynesian economics believes that AD is ________






17. Relationship between inflation and unemployment






18. One source of public debt






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






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






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






22. Accumulation of government deficits






23. Relation between inflation and unemployment






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






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






26. Classical economists believe that the AS curve is _______






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






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






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






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






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






32. Inflation that results from an initial increase in costs






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






34. Encourage foreign investment






35. The competition in the marketplace provides economic stability






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






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






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






39. According to Keynesian theory - AS curve is __________






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






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






42. The budget must be balanced each year






43. _________ will prefer to consume than to save






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






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






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






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






48. 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