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Test your basic knowledge |
CLEP Macroeconomics: Monetary And Fiscal Policy
Start Test
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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. Inflation that results from an initial increase in aggregate demand
recessions
high interest rates
demand-pull inflation
total public debt
2. According to Keynesian theory - AS curve is __________
classical economics
high interest rates
horizontal
classical theory of economics
3. ______ ______ is most important in a monetarist's view for determining output - price and employment levels
recessions
money supply
imbalance of trade
another name for New Classical Economists
4. NCE/RET imply that the aggregate supply curve is _______
debt
expansionary fiscal policy
definition of M - V - P - and Q
vertical
5. Relation between inflation and unemployment
inverse
nominal GDP
Phillips curve
horizontal
6. Accumulation of government deficits
total public debt
vertical
horizontal
functional finance
7. Believe that markets are highly competitive and adjust prices quickly to changes in supply and demand
NCE/RET
C + I + G + X = GDP
another name for New Classical Economists
cyclically balanced budget
8. One source of public debt
high interest rates
recessions
vertical
definition of M - V - P - and Q
9. Rational Expectations Theorists
another name for New Classical Economists
inflation
expansionary fiscal policy
interest payments on loans
10. The price level rises and money loses value
pro-cyclical
core of Keynesian economics
automatic stabilizers
inflation
11. The competition in the marketplace provides economic stability
money supply is constant
nominal GDP
inflation
monetarist view
12. Using taxes and spending to influence the level of GDP in the short run
interest payments on loans
equation of exchange
Phillips curve
Keynesian fiscal policy
13. New Classical Economists assert that households and firms pursue economics for their own ____-_________
self-interests
monetarist view
imbalance of trade
another name for New Classical Economists
14. 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
unstable
demand-pull inflation
functional finance
pro-cyclical
15. Money is at the root of aggregate demand
recessions
classical theory of economics
definition of M - V - P - and Q
interest payments on loans
16. 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
cyclically balanced budget
money supply is constant
C + I + G + X = GDP
recessions
17. A sudden and drastic change in the supply curve
supply shock
self-interests
accommodation
functional finance
18. Inflation accompanied by simultaneous increases in prices and unemployment
classical economics
increase taxes - decrease spending - or decrease interest rates
how to finance a deficit
stagflation
19. This consequence of national debt may lead to inflation
vertical
expansionary fiscal policy
interest payments on loans
supply shock
20. Three ways the government could reduce deficit: increase/decrease (1) taxes - (2) spending - and (3) interest rates
increase taxes - decrease spending - or decrease interest rates
debt
money supply
vertical
21. _________ will prefer to consume than to save
classical economics
equation of exchange
annually balanced budget
households
22. Money supply - velocity - price level - physical volume of goods and services
definition of M - V - P - and Q
anticipated inflation
interest payments on loans
total public debt
23. Keynesian economics believes that AD is ________
equation of exchange
unstable
households
increase taxes - decrease spending - or decrease interest rates
24. _____ tend to alter the behaviour of the public when imposed by the government
households
inverse
taxes
inflation
25. Fundamental equation of monetarism
equation of exchange
anticipated inflation
classical theory of economics
vertical
26. The economy may stagnate in the absence of proper work - saving and investment incentives
supply-side economics
C + I + G + X = GDP
increase taxes - decrease spending - or decrease interest rates
stagflation
27. Inflation that results from an initial increase in costs
stagflation
households
money supply is constant
cost-push inflation
28. Basic Keynesian economic equation
vertical
households
C + I + G + X = GDP
recessions
29. Feeds on interest payments & limits a government's ability to use discretionary stabilization policies
anticipated inflation
debt
monetarist view
NCE/RET
30. Which kind of inflation avoids some of the costs?
automatic stabilizers
vertical
how to finance a deficit
anticipated inflation
31. Encourage foreign investment
inflation
high interest rates
unbalanced
core of Keynesian economics
32. The use of monetary policy by the central bank to cushion the blow of aggregate supply shocks
imbalance of trade
money supply is constant
accommodation
automatic stabilizers
33. The government must go to the money markets and compete with the private sector for funds
nominal GDP
how to finance a deficit
imbalance of trade
debt
34. According to classical economics - AD curve is stable if....
vertical
equation of exchange
money supply is constant
core of Keynesian economics
35. Keynesian economists believe that monetary policy is a ____ tool for economic stability
inflation
Phillips curve
weak
another name for New Classical Economists
36. According to Keynesian economists - this could pull the economy out of a recession or depression
expansionary fiscal policy
weak
vertical
C + I + G + X = GDP
37. The budget must be balanced each year
definition of M - V - P - and Q
supply shock
supply-side economics
annually balanced budget
38. Relationship between inflation and unemployment
monetarist view
inverse
vertical
increase taxes - decrease spending - or decrease interest rates
39. Amount spent = amount received - which is equation of exchange
definition of M - V - P - and Q
vertical
classical economics
MV = PQ
40. PQ or price level times physical volume of goods and services - is equal to...
nominal GDP
supply shock
how to finance a deficit
another name for New Classical Economists
41. Taxes and transfer payments that stabilize GDP without requiring policymakers to take explicit actions
Phillips curve
automatic stabilizers
demand-pull inflation
households
42. Balancing the budget is secondary to ensuring that the economy runs at a non-inflationary full employment level
accommodation
inverse
money supply is constant
functional finance
43. Prices adjust in a natural way to bring the markets for goods and labor into equilibrium
classical economics
high interest rates
money supply
Keynesian fiscal policy
44. In the short-run prices and wages are downwardly inflexible
unbalanced
core of Keynesian economics
high interest rates
weak
45. According to RET - cost of this depends on whether or not it is expected
another name for New Classical Economists
interest payments on loans
inflation
Phillips curve
46. Large annual debts create this - promoting imports and stifling exports
automatic stabilizers
anticipated inflation
accommodation
imbalance of trade
47. Classical economists believe that the AS curve is _______
vertical
anticipated inflation
C + I + G + X = GDP
interest payments on loans
48. Modern fiscal policy favors this kind of budgets for the purpose of economic stabilization
vertical
expansionary fiscal policy
another name for New Classical Economists
unbalanced