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CLEP Macroeconomics: Monetary And Fiscal Policy

Subjects : clep, economics
  • Answer 48 questions in 15 minutes.
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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. NCE/RET imply that the aggregate supply curve is _______

2. Basic Keynesian economic equation

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

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

5. This consequence of national debt may lead to inflation

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

7. Classical economists believe that the AS curve is _______

8. 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

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

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

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

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

13. One source of public debt

14. According to Keynesian theory - AS curve is __________

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

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

17. Inflation that results from an initial increase in costs

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

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

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

21. The competition in the marketplace provides economic stability

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

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

24. A sudden and drastic change in the supply curve

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

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

27. Rational Expectations Theorists

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

29. Accumulation of government deficits

30. Encourage foreign investment

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

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

34. Relation between inflation and unemployment

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

36. _________ will prefer to consume than to save

37. Relationship between inflation and unemployment

38. The price level rises and money loses value

39. Money is at the root of aggregate demand

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

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

42. The budget must be balanced each year

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

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

45. Inflation accompanied by simultaneous increases in prices and unemployment

46. Fundamental equation of monetarism

47. Keynesian economics believes that AD is ________

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