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






2. The price level rises and money loses value






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






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






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






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






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






8. Relation between inflation and unemployment






9. This consequence of national debt may lead to inflation






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






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






12. Relationship between inflation and unemployment






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






14. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






17. Fundamental equation of monetarism






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






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






20. Money is at the root of aggregate demand






21. Rational Expectations Theorists






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






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






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






25. Classical economists believe that the AS curve is _______






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






27. 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






28. According to Keynesian theory - AS curve is __________






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






30. The budget must be balanced each year






31. The competition in the marketplace provides economic stability






32. Basic Keynesian economic equation






33. _________ will prefer to consume than to save






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






35. Encourage foreign investment






36. 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






37. A sudden and drastic change in the supply curve






38. Accumulation of government deficits






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






40. One source of public debt






41. Keynesian economics believes that AD is ________






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






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






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






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






46. Inflation that results from an initial increase in costs






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






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