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. Rational Expectations Theorists






3. Accumulation of government deficits






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






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






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






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






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






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






10. A sudden and drastic change in the supply curve






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






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






13. Basic Keynesian economic equation






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






15. Encourage foreign investment






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






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






18. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






21. 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






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






23. _________ will prefer to consume than to save






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






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






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






27. Keynesian economics believes that AD is ________






28. The budget must be balanced each year






29. Money is at the root of aggregate demand






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






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






32. 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






33. Relationship between inflation and unemployment






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






35. The competition in the marketplace provides economic stability






36. Relation between inflation and unemployment






37. Fundamental equation of monetarism






38. One source of public debt






39. Inflation that results from an initial increase in costs






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






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






42. This consequence of national debt may lead to inflation






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






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






45. According to Keynesian theory - AS curve is __________






46. Classical economists believe that the AS curve is _______






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






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