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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 20 minutes. 2 minutes extra for reading the instructions.
  • 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. Classical economists believe that the AS curve is _______






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






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






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






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






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






7. _________ will prefer to consume than to save






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






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






10. Keynesian economics believes that AD is ________






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






12. Accumulation of government deficits






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






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






15. Inflation accompanied by simultaneous increases in prices and unemployment






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






17. The price level rises and money loses value






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






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






20. Basic Keynesian economic equation






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






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






23. 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






24. Inflation that results from an initial increase in costs






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






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






27. The budget must be balanced each year






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






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






30. According to Keynesian theory - AS curve is __________






31. Relationship between inflation and unemployment






32. 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






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






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






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






36. A sudden and drastic change in the supply curve






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






38. Fundamental equation of monetarism






39. This consequence of national debt may lead to inflation






40. One source of public debt






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






42. Rational Expectations Theorists






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






44. Money is at the root of aggregate demand






45. The competition in the marketplace provides economic stability






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






47. Relation between inflation and unemployment






48. Encourage foreign investment