Economic Policy: Influential Theories – Flashcards
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Milton Friedman argued that consumers are more likely to alter their behavior based on
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long-term changes in the economy
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Classical economics played an important role in helping the United States establish
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free enterprise
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Friedrich Hayek believed that people change their demand behaviors
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as prices increase
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An economic thinker who influenced early economists was
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Adam Smith
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Expansionary monetary policy is used when a government
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increases its money supply to boost the economy
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The General Theory of Employment, Interest and Money was written by
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John Maynard Keynes
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John Maynard Keynes believed that governments should increase spending in order to
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increase demand
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Milton Friedman led a new economic school of thought called
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monetarism
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Monetarism plays a role in economic growth by
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influencing the supply of money.
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According to Milton Friedman, fiscal __________ policy is the best way to influence the economy's aggregate demand
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monetary
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Summarize the philosophical difference between economists John Maynard Keynes and Adam Smith?
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Keynes said government was the key to solving economic issues, while Smith believed government should take a hands-off approach.
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classical economics
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a group of early economic theories that focus on the establishment of economic freedoms
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coordinate
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to work together to meet a goal
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laissez faire
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the belief that governments should not be involved in economic affairs
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monetarism:
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an economic theory that promotes stability through influencing the money supply
