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