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