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