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






2. The price level rises and money loses value






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






4. One source of public debt






5. This consequence of national debt may lead to inflation






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






7. Money is at the root of aggregate demand






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






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






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






11. Fundamental equation of monetarism






12. Encourage foreign investment






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






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






15. Rational Expectations Theorists






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






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






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






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






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






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






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






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






24. The budget must be balanced each year






25. Inflation that results from an initial increase in costs






26. Basic Keynesian economic equation






27. 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






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






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






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






31. 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






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






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






34. A sudden and drastic change in the supply curve






35. Relationship between inflation and unemployment






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






37. The competition in the marketplace provides economic stability






38. _________ will prefer to consume than to save






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






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






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






42. Keynesian economics believes that AD is ________






43. Inflation accompanied by simultaneous increases in prices and unemployment






44. Accumulation of government deficits






45. According to Keynesian theory - AS curve is __________






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






47. Relation between inflation and unemployment






48. Classical economists believe that the AS curve is _______