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






2. Accumulation of government deficits






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






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






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






6. _________ will prefer to consume than to save






7. Rational Expectations Theorists






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






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






10. The competition in the marketplace provides economic stability






11. Keynesian economics believes that AD is ________






12. A sudden and drastic change in the supply curve






13. The price level rises and money loses value






14. Inflation that results from an initial increase in costs






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






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






17. The budget must be balanced each year






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






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






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






21. Fundamental equation of monetarism






22. Money is at the root of aggregate demand






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






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






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






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






27. According to Keynesian theory - AS curve is __________






28. 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






29. One source of public debt






30. 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






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






32. Basic Keynesian economic equation






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






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






35. This consequence of national debt may lead to inflation






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






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






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






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






40. Encourage foreign investment






41. Inflation accompanied by simultaneous increases in prices and unemployment






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






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






44. Relation between inflation and unemployment






45. Classical economists believe that the AS curve is _______






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






47. Relationship between inflation and unemployment






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