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