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