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






2. Relation between inflation and unemployment






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






4. 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






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






6. Encourage foreign investment






7. Classical economists believe that the AS curve is _______






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






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






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






11. The price level rises and money loses value






12. According to Keynesian theory - AS curve is __________






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






14. Inflation accompanied by simultaneous increases in prices and unemployment






15. Rational Expectations Theorists






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






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






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






20. Money is at the root of aggregate demand






21. A sudden and drastic change in the supply curve






22. _________ will prefer to consume than to save






23. The competition in the marketplace provides economic stability






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






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






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






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






28. Relationship between inflation and unemployment






29. The budget must be balanced each year






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






31. Basic Keynesian economic equation






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






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






34. Inflation that results from an initial increase in costs






35. Fundamental equation of monetarism






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






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






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






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






40. This consequence of national debt may lead to inflation






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






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






43. Keynesian economics believes that AD is ________






44. Accumulation of government deficits






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






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






47. One source of public debt






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