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 price level rises and money loses value






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






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






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






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






6. Classical economists believe that the AS curve is _______






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






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






9. Relation between inflation and unemployment






10. The budget must be balanced each year






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






12. 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






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






14. According to Keynesian theory - AS curve is __________






15. Relationship between inflation and unemployment






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






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






18. One source of public debt






19. The competition in the marketplace provides economic stability






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






21. Inflation accompanied by simultaneous increases in prices and unemployment






22. Keynesian economics believes that AD is ________






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






24. Inflation that results from an initial increase in costs






25. This consequence of national debt may lead to inflation






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






27. 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






28. Fundamental equation of monetarism






29. Money is at the root of aggregate demand






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






31. Accumulation of government deficits






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






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






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






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






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






37. Encourage foreign investment






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






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






40. Basic Keynesian economic equation






41. Rational Expectations Theorists






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






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






44. _________ will prefer to consume than to save






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






46. A sudden and drastic change in the supply curve






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






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