Test your basic knowledge |

CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
Instructions:
  • Answer 48 questions in 30 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 economy may stagnate in the absence of proper work - saving and investment incentives






2. 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






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






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






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






6. Money is at the root of aggregate demand






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






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






9. Rational Expectations Theorists






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






11. Inflation that results from an initial increase in costs






12. According to Keynesian theory - AS curve is __________






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






14. The competition in the marketplace provides economic stability






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






16. One source of public debt






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






18. The budget must be balanced each year






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






20. Accumulation of government deficits






21. A sudden and drastic change in the supply curve






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






23. This consequence of national debt may lead to inflation






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






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






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






27. _________ will prefer to consume than to save






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






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






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






31. Encourage foreign investment






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






34. The price level rises and money loses value






35. Fundamental equation of monetarism






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






37. Relationship between inflation and unemployment






38. Relation between inflation and unemployment






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






40. Classical economists believe that the AS curve is _______






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






42. Keynesian economics believes that AD is ________






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






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






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






46. Inflation accompanied by simultaneous increases in prices and unemployment






47. Basic Keynesian economic equation






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