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