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. Inflation accompanied by simultaneous increases in prices and unemployment






2. 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






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






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






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






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






7. 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






8. Money is at the root of aggregate demand






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






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






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






12. The competition in the marketplace provides economic stability






13. This consequence of national debt may lead to inflation






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






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






16. The price level rises and money loses value






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






18. Rational Expectations Theorists






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






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






21. Relationship between inflation and unemployment






22. Keynesian economics believes that AD is ________






23. Relation between inflation and unemployment






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






25. Fundamental equation of monetarism






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






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






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






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






30. Accumulation of government deficits






31. Encourage foreign investment






32. Inflation that results from an initial increase in costs






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






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






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






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






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






38. One source of public debt






39. Classical economists believe that the AS curve is _______






40. Basic Keynesian economic equation






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






42. _________ will prefer to consume than to save






43. The budget must be balanced each year






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






45. According to Keynesian theory - AS curve is __________






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






47. A sudden and drastic change in the supply curve






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