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






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






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






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






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






6. Fundamental equation of monetarism






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






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






9. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






13. One source of public debt






14. Inflation that results from an initial increase in costs






15. 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






16. A sudden and drastic change in the supply curve






17. Encourage foreign investment






18. Classical economists believe that the AS curve is _______






19. Accumulation of government deficits






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






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






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






23. Relation between inflation and unemployment






24. Rational Expectations Theorists






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






26. Money is at the root of aggregate demand






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






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






29. This consequence of national debt may lead to inflation






30. The competition in the marketplace provides economic stability






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






32. Relationship between inflation and unemployment






33. According to Keynesian theory - AS curve is __________






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






35. Keynesian economics believes that AD is ________






36. 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






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






38. Basic Keynesian economic equation






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






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






41. The budget must be balanced each year






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






43. The price level rises and money loses value






44. _________ will prefer to consume than to save






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






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






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






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