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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. 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






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






3. Encourage foreign investment






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






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






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






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






8. Relation between inflation and unemployment






9. The price level rises and money loses value






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






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






12. A sudden and drastic change in the supply curve






13. Keynesian economics believes that AD is ________






14. The competition in the marketplace provides economic stability






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






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






17. This consequence of national debt may lead to inflation






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






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






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






21. Classical economists believe that the AS curve is _______






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






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






24. _________ will prefer to consume than to save






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






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






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






28. One source of public debt






29. Accumulation of government deficits






30. Inflation that results from an initial increase in costs






31. Basic Keynesian economic equation






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






33. Fundamental equation of monetarism






34. The budget must be balanced each year






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






36. Relationship between inflation and unemployment






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






38. Money is at the root of aggregate demand






39. Rational Expectations Theorists






40. Inflation accompanied by simultaneous increases in prices and unemployment






41. 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






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






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






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






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






46. According to Keynesian theory - AS curve is __________






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






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