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