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






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






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






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






5. The budget must be balanced each year






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






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






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






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






10. Fundamental equation of monetarism






11. According to Keynesian theory - AS curve is __________






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






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






14. Keynesian economics believes that AD is ________






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






16. 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






17. Classical economists believe that the AS curve is _______






18. Rational Expectations Theorists






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






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






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. Accumulation of government deficits






23. Relation between inflation and unemployment






24. Money is at the root of aggregate demand






25. A sudden and drastic change in the supply curve






26. The price level rises and money loses value






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






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






29. One source of public debt






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






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






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






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






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






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






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






37. Inflation accompanied by simultaneous increases in prices and unemployment






38. Inflation that results from an initial increase in costs






39. Encourage foreign investment






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






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






42. Basic Keynesian economic equation






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






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






45. _________ will prefer to consume than to save






46. This consequence of national debt may lead to inflation






47. The competition in the marketplace provides economic stability






48. Relationship between inflation and unemployment