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






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






3. The competition in the marketplace provides economic stability






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






7. Money is at the root of aggregate demand






8. According to Keynesian theory - AS curve is __________






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






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






11. One source of public debt






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






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






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






15. Accumulation of government deficits






16. This consequence of national debt may lead to inflation






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






18. _________ will prefer to consume than to save






19. Encourage foreign investment






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






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






22. Inflation accompanied by simultaneous increases in prices and unemployment






23. Basic Keynesian economic equation






24. 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






25. Fundamental equation of monetarism






26. Relationship between inflation and unemployment






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






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






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






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






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






32. Relation between inflation and unemployment






33. The budget must be balanced each year






34. 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






35. A sudden and drastic change in the supply curve






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






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






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






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






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






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






42. The price level rises and money loses value






43. Inflation that results from an initial increase in costs






44. Keynesian economics believes that AD is ________






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






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






47. Rational Expectations Theorists






48. Classical economists believe that the AS curve is _______