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