Economic Policy: Influential Theories Test Questions – Flashcards
Unlock all answers in this set
Unlock answersquestion
Milton Friedman argued that consumers are more likely to alter their behavior based on
answer
long-term changes in the economy.
question
Which economists most likely would have agreed with the US government's intervention during an economic crisis in 2008?
answer
John Maynard Keynes and Milton Friedman
question
A government might enact expansionary spending when it is trying to
answer
increase aggregate demand for goods.
question
John Maynard Keynes believed that governments should increase spending in order to
answer
increase demand.
question
Why did Friedrich Hayek call expansionary spending dangerous?
answer
He felt it could lead to inflation and poor decisions by consumers.
question
Friedrich Hayek believed that
answer
the economy is too complicated to apply aggregates.
question
Monetarism plays a role in economic growth by
answer
influencing the supply of money.
question
Which occurred during the Great Depression? Check all that apply.
answer
🚫◻️✔️◻️✔️✔️◻️ unemployment, plumment growth, deflation, falling prices and wages 🚫◻️✔️◻️✔️✔️◻️ aggregate demand, new forms of money, falling wages, increasing prices, plummeting growth, surging unemployment
question
Expansionary monetary policy is used when a government
answer
increases its money supply to boost the economy.
question
What is likely to happen if a new aggregate demand curve moves to the right?
answer
Prices and output would rise in the short and long run.
question
The General Theory of Employment, Interest and Money was written by
answer
John Maynard Keynes.
question
Which best summarizes the philosophical difference between economists John Maynard Keynes and Adam Smith?
answer
Keynes said government was the key to solving economic issues, while Smith believed government should take a hands-off approach.
question
According to Milton Friedman, [__________________] policy is the best way to influence the economy's aggregate demand.
answer
-monetary
question
Which best describes how individuals help the economy grow?
answer
They work in their own self-interest.
question
Classical economics played an important role in helping the United States establish [___________________________]
answer
-free enterprise
question
Which best describes the idea behind the "invisible hand"?
answer
Producers and consumers work together, which guides the economy.
question
An economic thinker who influenced early economists was
answer
Adam Smith.
question
Milton Friedman led a new economic school of thought called
answer
monetarism.
question
How did Adam Smith's economic ideas help the United States establish a free enterprise system? Check all that apply.
answer
-They led to freedom of choice for consumers and producers. -They led to open competition for consumers. -They led to individual ownership of property.
