Test your basic knowledge |

CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 20 minutes. 2 minutes extra for reading the instructions.
  • 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. The government must go to the money markets and compete with the private sector for funds






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






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






5. One source of public debt






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






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






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






9. The budget must be balanced each year






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






11. 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






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






13. This consequence of national debt may lead to inflation






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






15. Basic Keynesian economic equation






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






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






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






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






20. According to Keynesian theory - AS curve is __________






21. Fundamental equation of monetarism






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






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






24. Rational Expectations Theorists






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






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






27. Accumulation of government deficits






28. Inflation that results from an initial increase in costs






29. Encourage foreign investment






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






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






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






33. _________ will prefer to consume than to save






34. 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






35. The competition in the marketplace provides economic stability






36. Inflation accompanied by simultaneous increases in prices and unemployment






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






38. Keynesian economics believes that AD is ________






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






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






41. A sudden and drastic change in the supply curve






42. The price level rises and money loses value






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






44. Money is at the root of aggregate demand






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






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






47. Relationship between inflation and unemployment






48. Classical economists believe that the AS curve is _______