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






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






3. _________ will prefer to consume than to save






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






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






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






7. Classical economists believe that the AS curve is _______






8. Relationship between inflation and unemployment






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






10. According to Keynesian theory - AS curve is __________






11. Inflation that results from an initial increase in costs






12. Fundamental equation of monetarism






13. The budget must be balanced each year






14. Money is at the root of aggregate demand






15. 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






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






17. Keynesian economics believes that AD is ________






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






19. Accumulation of government deficits






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






21. Rational Expectations Theorists






22. Encourage foreign investment






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






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






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






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






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






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






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






30. Relation between inflation and unemployment






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. The competition in the marketplace provides economic stability






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






34. Basic Keynesian economic equation






35. One source of public debt






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






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






38. This consequence of national debt may lead to inflation






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






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






41. A sudden and drastic change in the supply curve






42. The price level rises and money loses value






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






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






45. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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