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. Relation between inflation and unemployment






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






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






4. Fundamental equation of monetarism






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






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






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






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






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






10. Keynesian economics believes that AD is ________






11. Inflation accompanied by simultaneous increases in prices and unemployment






12. The budget must be balanced each year






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






14. The competition in the marketplace provides economic stability






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






16. Rational Expectations Theorists






17. The price level rises and money loses value






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






19. 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






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






21. This consequence of national debt may lead to inflation






22. _________ will prefer to consume than to save






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






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






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






26. Relationship between inflation and unemployment






27. Accumulation of government deficits






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






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






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






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






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






33. Money is at the root of aggregate demand






34. Encourage foreign investment






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






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






37. Classical economists believe that the AS curve is _______






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






39. One source of public debt






40. A sudden and drastic change in the supply curve






41. Inflation that results from an initial increase in costs






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






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






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






45. Basic Keynesian economic equation






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






47. According to Keynesian theory - AS curve is __________






48. 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