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