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