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