Test your basic knowledge |

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






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






3. Basic Keynesian economic equation






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






5. Classical economists believe that the AS curve is _______






6. A sudden and drastic change in the supply curve






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






8. Relation between inflation and unemployment






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






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






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






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






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






14. Fundamental equation of monetarism






15. Inflation accompanied by simultaneous increases in prices and unemployment






16. Accumulation of government deficits






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






18. Rational Expectations Theorists






19. Relationship between inflation and unemployment






20. Inflation that results from an initial increase in costs






21. 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






22. This consequence of national debt may lead to inflation






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






24. 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






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






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






27. Keynesian economics believes that AD is ________






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






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






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






31. The price level rises and money loses value






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






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






34. The budget must be balanced each year






35. The competition in the marketplace provides economic stability






36. Encourage foreign investment






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






38. _________ will prefer to consume than to save






39. One source of public debt






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






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






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






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






44. According to Keynesian theory - AS curve is __________






45. Money is at the root of aggregate demand






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






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






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