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