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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. This consequence of national debt may lead to inflation






2. The competition in the marketplace provides economic stability






3. Basic Keynesian economic equation






4. The price level rises and money loses value






5. Encourage foreign investment






6. Relation between inflation and unemployment






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






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






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






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






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






12. Rational Expectations Theorists






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






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






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






16. _________ will prefer to consume than to save






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






18. Keynesian economics believes that AD is ________






19. Inflation accompanied by simultaneous increases in prices and unemployment






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






21. One source of public debt






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






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






24. 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






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






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






27. Relationship between inflation and unemployment






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






29. Accumulation of government deficits






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






31. 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






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






33. The budget must be balanced each year






34. A sudden and drastic change in the supply curve






35. Inflation that results from an initial increase in costs






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






37. Classical economists believe that the AS curve is _______






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






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






40. Money is at the root of aggregate demand






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






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






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






44. Fundamental equation of monetarism






45. According to Keynesian theory - AS curve is __________






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






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






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