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