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