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. Accumulation of government deficits






2. The price level rises and money loses value






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






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






5. The budget must be balanced each year






6. _________ will prefer to consume than to save






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






8. Fundamental equation of monetarism






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






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






11. Relationship between inflation and unemployment






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






13. Money is at the root of aggregate demand






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






15. Inflation that results from an initial increase in costs






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






17. Encourage foreign investment






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






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






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






21. 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






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






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






24. Rational Expectations Theorists






25. Relation between inflation and unemployment






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






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






28. Classical economists believe that the AS curve is _______






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






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






31. 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






32. A sudden and drastic change in the supply curve






33. According to Keynesian theory - AS curve is __________






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






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






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






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






38. The competition in the marketplace provides economic stability






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






40. One source of public debt






41. This consequence of national debt may lead to inflation






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






43. Basic Keynesian economic equation






44. Keynesian economics believes that AD is ________






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






46. Inflation accompanied by simultaneous increases in prices and unemployment






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






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