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






3. Encourage foreign investment






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






5. This consequence of national debt may lead to inflation






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






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






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






9. The competition in the marketplace provides economic stability






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






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






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






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






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






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






16. _________ will prefer to consume than to save






17. Classical economists believe that the AS curve is _______






18. Relationship between inflation and unemployment






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






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






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






22. 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






23. A sudden and drastic change in the supply curve






24. Relation between inflation and unemployment






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






26. The price level rises and money loses value






27. Rational Expectations Theorists






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






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






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






31. Inflation accompanied by simultaneous increases in prices and unemployment






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






33. One source of public debt






34. Fundamental equation of monetarism






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






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






37. 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






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






39. Money is at the root of aggregate demand






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






41. Basic Keynesian economic equation






42. Keynesian economics believes that AD is ________






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






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






45. Accumulation of government deficits






46. Inflation that results from an initial increase in costs






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






48. According to Keynesian theory - AS curve is __________