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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 20 minutes. 2 minutes extra for reading the instructions.
  • 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. Basic Keynesian economic equation






2. Accumulation of government deficits






3. The budget must be balanced each year






4. _________ will prefer to consume than to save






5. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






9. 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






10. A sudden and drastic change in the supply curve






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






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






13. The competition in the marketplace provides economic stability






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






15. Money is at the root of aggregate demand






16. Rational Expectations Theorists






17. Fundamental equation of monetarism






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






19. Relationship between inflation and unemployment






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






21. According to Keynesian theory - AS curve is __________






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






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






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






25. Inflation that results from an initial increase in costs






26. One source of public debt






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






28. Encourage foreign investment






29. Keynesian economics believes that AD is ________






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






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






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






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






34. Classical economists believe that the AS curve is _______






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






36. Relation between inflation and unemployment






37. This consequence of national debt may lead to inflation






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






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






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






41. 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






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






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






44. The price level rises and money loses value






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






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






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






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