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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. One source of public debt






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






3. Fundamental equation of monetarism






4. Keynesian economics believes that AD is ________






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






6. The price level rises and money loses value






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






8. Accumulation of government deficits






9. The competition in the marketplace provides economic stability






10. Encourage foreign investment






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






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






13. Classical economists believe that the AS curve is _______






14. _________ will prefer to consume than to save






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






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






17. The budget must be balanced each year






18. Relation between inflation and unemployment






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






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






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






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






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






24. Rational Expectations Theorists






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






26. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






29. Money is at the root of aggregate demand






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






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






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






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






34. A sudden and drastic change in the supply curve






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






36. 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






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






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






39. According to Keynesian theory - AS curve is __________






40. Basic Keynesian economic equation






41. Inflation that results from an initial increase in costs






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






43. This consequence of national debt may lead to inflation






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






45. Relationship between inflation and unemployment






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






47. 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






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