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






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






3. A sudden and drastic change in the supply curve






4. Keynesian economics believes that AD is ________






5. The budget must be balanced each year






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






7. Basic Keynesian economic equation






8. _________ will prefer to consume than to save






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






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






11. Relation between inflation and unemployment






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






13. Rational Expectations Theorists






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






15. Fundamental equation of monetarism






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






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






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






19. The competition in the marketplace provides economic stability






20. Accumulation of government deficits






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






22. Inflation that results from an initial increase in costs






23. 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






24. One source of public debt






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






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






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






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






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






30. 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






31. The price level rises and money loses value






32. Classical economists believe that the AS curve is _______






33. Encourage foreign investment






34. According to Keynesian theory - AS curve is __________






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






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






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






38. Inflation accompanied by simultaneous increases in prices and unemployment






39. Relationship between inflation and unemployment






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






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






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






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






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






45. This consequence of national debt may lead to inflation






46. Money is at the root of aggregate demand






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






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