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