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