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






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






3. Fundamental equation of monetarism






4. _________ will prefer to consume than to save






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






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






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






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






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






10. Money is at the root of aggregate demand






11. Basic Keynesian economic equation






12. 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






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






14. The budget must be balanced each year






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






16. The price level rises and money loses value






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






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






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






20. 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






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






22. Encourage foreign investment






23. Inflation that results from an initial increase in costs






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






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






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






27. Relation between inflation and unemployment






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






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






30. According to Keynesian theory - AS curve is __________






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






32. This consequence of national debt may lead to inflation






33. Relationship between inflation and unemployment






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






35. Accumulation of government deficits






36. One source of public debt






37. The competition in the marketplace provides economic stability






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






39. Keynesian economics believes that AD is ________






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






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






42. Rational Expectations Theorists






43. A sudden and drastic change in the supply curve






44. Classical economists believe that the AS curve is _______






45. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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