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