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. Money is at the root of aggregate demand






2. This consequence of national debt may lead to inflation






3. According to Keynesian theory - AS curve is __________






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






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






6. Encourage foreign investment






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






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






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






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






11. Basic Keynesian economic equation






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






13. _________ will prefer to consume than to save






14. Relation between inflation and unemployment






15. Fundamental equation of monetarism






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






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






18. Inflation that results from an initial increase in costs






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






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






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






22. A sudden and drastic change in the supply curve






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






24. Classical economists believe that the AS curve is _______






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






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






27. The price level rises and money loses value






28. Keynesian economics believes that AD is ________






29. Inflation accompanied by simultaneous increases in prices and unemployment






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






31. The competition in the marketplace provides economic stability






32. 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






33. 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






34. Relationship between inflation and unemployment






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






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






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






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






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






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






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






42. Rational Expectations Theorists






43. The budget must be balanced each year






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






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






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






47. Accumulation of government deficits






48. One source of public debt