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






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






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






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






5. The price level rises and money loses value






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






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






8. Classical economists believe that the AS curve is _______






9. Money is at the root of aggregate demand






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






11. Inflation accompanied by simultaneous increases in prices and unemployment






12. A sudden and drastic change in the supply curve






13. 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






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






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






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






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






18. Encourage foreign investment






19. Accumulation of government deficits






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






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






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






23. Keynesian economics believes that AD is ________






24. The budget must be balanced each year






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






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






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






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






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






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






31. According to Keynesian theory - AS curve is __________






32. The competition in the marketplace provides economic stability






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






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






35. 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






36. Rational Expectations Theorists






37. Relationship between inflation and unemployment






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






39. Basic Keynesian economic equation






40. Inflation that results from an initial increase in costs






41. _________ will prefer to consume than to save






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






43. Relation between inflation and unemployment






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






45. This consequence of national debt may lead to inflation






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






47. Fundamental equation of monetarism






48. One source of public debt