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






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






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






4. One source of public debt






5. Classical economists believe that the AS curve is _______






6. Relation between inflation and unemployment






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






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






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






10. Fundamental equation of monetarism






11. _________ will prefer to consume than to save






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






13. Relationship between inflation and unemployment






14. Keynesian economics believes that AD is ________






15. 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






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






17. Money is at the root of aggregate demand






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






19. This consequence of national debt may lead to inflation






20. The budget must be balanced each year






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






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






23. Inflation accompanied by simultaneous increases in prices and unemployment






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






25. According to Keynesian theory - AS curve is __________






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






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






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






29. Encourage foreign investment






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






31. A sudden and drastic change in the supply curve






32. The competition in the marketplace provides economic stability






33. 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






34. The price level rises and money loses value






35. Accumulation of government deficits






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






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






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






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






40. Basic Keynesian economic equation






41. Rational Expectations Theorists






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






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






46. Inflation that results from an initial increase in costs






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






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