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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 30 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 consequence of national debt may lead to inflation






2. Keynesian economics believes that AD is ________






3. A sudden and drastic change in the supply curve






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






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






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






7. _________ will prefer to consume than to save






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






9. Rational Expectations Theorists






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






11. Relationship between inflation and unemployment






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






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






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






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






16. Inflation accompanied by simultaneous increases in prices and unemployment






17. Basic Keynesian economic equation






18. 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






19. Classical economists believe that the AS curve is _______






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






21. Money is at the root of aggregate demand






22. The price level rises and money loses value






23. Inflation that results from an initial increase in costs






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






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






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






27. Encourage foreign investment






28. Accumulation of government deficits






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






30. The competition in the marketplace provides economic stability






31. Relation between inflation and unemployment






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






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






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






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






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






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






38. Fundamental equation of monetarism






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






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






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






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






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






44. 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






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






46. The budget must be balanced each year






47. According to Keynesian theory - AS curve is __________






48. One source of public debt