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