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