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