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






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






3. The budget must be balanced each year






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






5. Relationship between inflation and unemployment






6. The price level rises and money loses value






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






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






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






10. Accumulation of government deficits






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






12. One source of public debt






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






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






15. Inflation that results from an initial increase in costs






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






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






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






19. Keynesian economics believes that AD is ________






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. Classical economists believe that the AS curve is _______






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






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






25. The competition in the marketplace provides economic stability






26. Money is at the root of aggregate demand






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






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






29. 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






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






31. Encourage foreign investment






32. _________ will prefer to consume than to save






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






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






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






36. Fundamental equation of monetarism






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






38. A sudden and drastic change in the supply curve






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






40. 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






41. This consequence of national debt may lead to inflation






42. Rational Expectations Theorists






43. Basic Keynesian economic equation






44. According to Keynesian theory - AS curve is __________






45. Relation between inflation and unemployment






46. Inflation accompanied by simultaneous increases in prices and unemployment






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






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