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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. Classical economists believe that the AS curve is _______






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






4. According to Keynesian theory - AS curve is __________






5. One source of public debt






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






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






8. Encourage foreign investment






9. This consequence of national debt may lead to inflation






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






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






12. Basic Keynesian economic equation






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






14. A sudden and drastic change in the supply curve






15. Fundamental equation of monetarism






16. Relationship between inflation and unemployment






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






18. 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






19. The budget must be balanced each year






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






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






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






23. _________ will prefer to consume than to save






24. The price level rises and money loses value






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






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






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






28. 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






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






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






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






32. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






35. Relation between inflation and unemployment






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






37. Accumulation of government deficits






38. Keynesian economics believes that AD is ________






39. The competition in the marketplace provides economic stability






40. Inflation that results from an initial increase in costs






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






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






43. Money is at the root of aggregate demand






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






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






46. Rational Expectations Theorists






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






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






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