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