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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. Rational Expectations Theorists






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






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






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






5. A sudden and drastic change in the supply curve






6. This consequence of national debt may lead to inflation






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






8. Money is at the root of aggregate demand






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






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






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






12. Inflation that results from an initial increase in costs






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






14. According to Keynesian theory - AS curve is __________






15. 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






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






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






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






19. Accumulation of government deficits






20. One source of public debt






21. 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






22. The competition in the marketplace provides economic stability






23. Relation between inflation and unemployment






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






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






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






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






28. Keynesian economics believes that AD is ________






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






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






31. _________ will prefer to consume than to save






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






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






34. The price level rises and money loses value






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






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






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






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






39. Fundamental equation of monetarism






40. Basic Keynesian economic equation






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






42. Classical economists believe that the AS curve is _______






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






44. Encourage foreign investment






45. Inflation accompanied by simultaneous increases in prices and unemployment






46. The budget must be balanced each year






47. Relationship between inflation and unemployment






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