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