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