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. The budget must be balanced each year






2. Classical economists believe that the AS curve is _______






3. Money is at the root of aggregate demand






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






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






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






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






8. Relationship between inflation and unemployment






9. A sudden and drastic change in the supply curve






10. One source of public debt






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






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






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






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






15. According to Keynesian theory - AS curve is __________






16. Accumulation of government deficits






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






18. Keynesian economics believes that AD is ________






19. _________ will prefer to consume than to save






20. Inflation accompanied by simultaneous increases in prices and unemployment






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






22. Relation between inflation and unemployment






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






24. Inflation that results from an initial increase in costs






25. Fundamental equation of monetarism






26. The competition in the marketplace provides economic stability






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






28. Encourage foreign investment






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






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






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






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






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






34. This consequence of national debt may lead to inflation






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






36. 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






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






38. 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






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






40. Rational Expectations Theorists






41. Basic Keynesian economic equation






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






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






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






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






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






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






48. The price level rises and money loses value