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