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. Relation between inflation and unemployment






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






3. According to Keynesian theory - AS curve is __________






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






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






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






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






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






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






10. 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






11. Classical economists believe that the AS curve is _______






12. This consequence of national debt may lead to inflation






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






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






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






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






17. Inflation that results from an initial increase in costs






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






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






20. Basic Keynesian economic equation






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






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






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






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






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






26. Fundamental equation of monetarism






27. One source of public debt






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






29. 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






30. Accumulation of government deficits






31. Rational Expectations Theorists






32. A sudden and drastic change in the supply curve






33. The price level rises and money loses value






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






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






36. Keynesian economics believes that AD is ________






37. Encourage foreign investment






38. The competition in the marketplace provides economic stability






39. Relationship between inflation and unemployment






40. The budget must be balanced each year






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






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






43. Inflation accompanied by simultaneous increases in prices and unemployment






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






45. Money is at the root of aggregate demand






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






47. _________ will prefer to consume than to save






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