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