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