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. Keynesian economics believes that AD is ________






2. Inflation that results from an initial increase in costs






3. Relation between inflation and unemployment






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






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






6. A sudden and drastic change in the supply curve






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






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






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






10. The budget must be balanced each year






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






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






13. _________ will prefer to consume than to save






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






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






16. Relationship between inflation and unemployment






17. 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






18. According to Keynesian theory - AS curve is __________






19. Encourage foreign investment






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






21. Classical economists believe that the AS curve is _______






22. This consequence of national debt may lead to inflation






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






24. Accumulation of government deficits






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






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






27. The price level rises and money loses value






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






29. One source of public debt






30. 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






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






32. Money is at the root of aggregate demand






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






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






35. Basic Keynesian economic equation






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






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






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






39. The competition in the marketplace provides economic stability






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






41. Fundamental equation of monetarism






42. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






45. Rational Expectations Theorists






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






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






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