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