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