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