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