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






2. Relation between inflation and unemployment






3. One source of public debt






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






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






6. 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






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






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






9. _________ will prefer to consume than to save






10. Fundamental equation of monetarism






11. The budget must be balanced each year






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






13. Accumulation of government deficits






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






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






16. Basic Keynesian economic equation






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






18. Keynesian economics believes that AD is ________






19. A sudden and drastic change in the supply curve






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






21. 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






22. The competition in the marketplace provides economic stability






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






24. Classical economists believe that the AS curve is _______






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






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






27. Rational Expectations Theorists






28. Relationship between inflation and unemployment






29. Encourage foreign investment






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






31. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






35. The price level rises and money loses value






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






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






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






39. This consequence of national debt may lead to inflation






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






41. According to Keynesian theory - AS curve is __________






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






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






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






45. Money is at the root of aggregate demand






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






47. Inflation that results from an initial increase in costs






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