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 budget must be balanced each year






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






3. Accumulation of government deficits






4. Classical economists believe that the AS curve is _______






5. This consequence of national debt may lead to inflation






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






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






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






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






10. The price level rises and money loses value






11. One source of public debt






12. Inflation that results from an initial increase in costs






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






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






15. Rational Expectations Theorists






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






17. A sudden and drastic change in the supply curve






18. _________ will prefer to consume than to save






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






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






21. Encourage foreign investment






22. The competition in the marketplace provides economic stability






23. Basic Keynesian economic equation






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






25. 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






26. Money is at the root of aggregate demand






27. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






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






31. Relation between inflation and unemployment






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






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






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






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






36. According to Keynesian theory - AS curve is __________






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






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






39. Relationship between inflation and unemployment






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






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






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






43. Fundamental equation of monetarism






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






45. 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






46. Keynesian economics believes that AD is ________






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






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