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