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