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