Economic Policy: Influential Theories Answers
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John Maynard Keynes believed that governments should increase spending in order to
A
increase prices.B
increase supply.C
decrease demand.D
increase demand.2
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Friedrich Hayek believed that
A
behaviors could be easily predicted.B
individuals could not influence the economy.C
the economy is simply explained through behaviors.D
the economy is too complicated to apply aggregates.3
Why did Friedrich Hayek call expansionary spending dangerous?
A
He felt it could lower the money supply and cause deflation.B
He felt it could lead to inflation and poor decisions by consumers.C
He felt it could lead to deflation and poor decisions by consumers.D
He felt it could lower available credit and cause a drop in prices.4
The graph shows Keynes's theory of aggregate demand.
A
Prices and output would drop, and the equilibrium point will stay the same.B
Prices would rise, and output would drop in the short run.C
Prices and output would rise, and the equilibrium point will change.D
Prices would rise, and output would drop in the long run.5
What are the goals when a government uses expansionary monetary policy? Check all that apply.
A
increasing its money supply to boost the economyB
decreasing its money supply to slow the economyC
increasing its money supply to speed business expansionD
decreasing its money supply to curb business expansionE
decreasing its interest rates to increase investment spending6
Milton Friedman argued that consumers are more likely to alter their behavior based on
A
changes in the unemployment rate.B
short-term changes in the economy.C
long-term changes in the economy.D
changes in the inflation rate.7
Milton Friedman led a new economic school of thought called
A
laissez faire.B
monetarism.C
price signaling.D
the invisible hand.8
[BLANK]
A
free enterpriseB
government regulationC
Keynesian economicsD
monetary policy9
The graph shows how individuals affect economic growth.
A
They work in their own self-interest.B
They work as part of a unified group.C
They work to influence the money supply.D
They work to influence the economy.10
The graph shows an early economic theory known as the "invisible hand."
A
Producers decide what to make for consumers, which guides the economy.B
Individuals seeking their own self interest benefit the economy as a whole.C
Government sets policy for producers and consumers, which guides the economy.D
Consumers decide what they need and want to buy, which guides the economy.Did you find these answers helpful?
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