Economic Policy: Influential Theories Test Questions – Flashcards
19 test answers
Unlock all answers in this set
Unlock answers 19question
Why did Friedrich Hayek call expansionary spending dangerous?
answer
He felt it could lead to inflation and poor decisions by consumers.
Unlock the answer
question
Friedrich Hayek believed that
answer
the economy is too complicated to apply aggregates.
Unlock the answer
question
Monetarism plays a role in economic growth by
answer
influencing the supply of money.
Unlock the answer
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
Unlock the answer
question
Expansionary monetary policy is used when a government
answer
increases its money supply to boost the economy.
Unlock the answer
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.
Unlock the answer
question
The General Theory of Employment, Interest and Money was written by
answer
John Maynard Keynes.
Unlock the answer
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.
Unlock the answer
question
According to Milton Friedman, [__________________] policy is the best way to influence the economy's aggregate demand.
answer
-monetary
Unlock the answer
question
Which best describes how individuals help the economy grow?
answer
They work in their own self-interest.
Unlock the answer
question
Classical economics played an important role in helping the United States establish [___________________________]
answer
-free enterprise
Unlock the answer
question
Which best describes the idea behind the "invisible hand"?
answer
Producers and consumers work together, which guides the economy.
Unlock the answer
question
An economic thinker who influenced early economists was
answer
Adam Smith.
Unlock the answer
question
Milton Friedman led a new economic school of thought called
answer
monetarism.
Unlock the answer
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.
Unlock the answer
