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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
  • Answer 48 questions in 15 minutes.
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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. ______ ______ is most important in a monetarist's view for determining output - price and employment levels

2. Inflation that results from an initial increase in costs

3. The budget must be balanced each year

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

5. Encourage foreign investment

6. Money is at the root of aggregate demand

7. This consequence of national debt may lead to inflation

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

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

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

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

12. Rational Expectations Theorists

13. Accumulation of government deficits

14. 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

15. Keynesian economics believes that AD is ________

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

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

18. One source of public debt

19. _________ will prefer to consume than to save

20. Inflation accompanied by simultaneous increases in prices and unemployment

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

22. Relationship between inflation and unemployment

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

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

25. Classical economists believe that the AS curve is _______

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

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

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

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

30. 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

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

32. The price level rises and money loses value

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

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

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

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

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

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

39. Fundamental equation of monetarism

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

41. Basic Keynesian economic equation

42. The competition in the marketplace provides economic stability

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

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

45. A sudden and drastic change in the supply curve

46. Relation between inflation and unemployment

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

48. According to Keynesian theory - AS curve is __________