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






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






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






4. Accumulation of government deficits






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






6. A sudden and drastic change in the supply curve






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






8. According to Keynesian theory - AS curve is __________






9. 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






10. _________ will prefer to consume than to save






11. Money is at the root of aggregate demand






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






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






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






15. Fundamental equation of monetarism






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






17. Encourage foreign investment






18. Relationship between inflation and unemployment






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






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






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






22. The budget must be balanced each year






23. Relation between inflation and unemployment






24. Inflation accompanied by simultaneous increases in prices and unemployment






25. Classical economists believe that the AS curve is _______






26. 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






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






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






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






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






31. Basic Keynesian economic equation






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






33. Inflation that results from an initial increase in costs






34. One source of public debt






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






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






37. The competition in the marketplace provides economic stability






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






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






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






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






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






43. Keynesian economics believes that AD is ________






44. This consequence of national debt may lead to inflation






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






46. Rational Expectations Theorists






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






48. The price level rises and money loses value