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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. Inflation that results from an initial increase in aggregate demand






2. According to Keynesian theory - AS curve is __________






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






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






5. Relation between inflation and unemployment






6. Accumulation of government deficits






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






8. One source of public debt






9. Rational Expectations Theorists






10. The price level rises and money loses value






11. The competition in the marketplace provides economic stability






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






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






14. 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






15. Money is at the root of aggregate demand






16. 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






17. A sudden and drastic change in the supply curve






18. Inflation accompanied by simultaneous increases in prices and unemployment






19. This consequence of national debt may lead to inflation






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






21. _________ will prefer to consume than to save






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






23. Keynesian economics believes that AD is ________






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






25. Fundamental equation of monetarism






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






27. Inflation that results from an initial increase in costs






28. Basic Keynesian economic equation






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






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






31. Encourage foreign investment






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






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






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






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






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






37. The budget must be balanced each year






38. Relationship between inflation and unemployment






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






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






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






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






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






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






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






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






47. Classical economists believe that the AS curve is _______






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