Economic Policy: Influential Theories Quizzes And Answers

Which occurred during the Great Depression? Check all that apply. falling wages plummeting growth surging unemployment How did Adam Smith's economic ideas help the United States establish a free enterprise system? Check all that apply. They led to freedom of choice for consumers and producers. They led to open competition for consumers. They led to individual ownership of property. The General Theory of Employment, Interest and Money was written by John Maynard Keynes. Milton Friedman argued that consumers are more likely to alter their behavior based on long-term changes in the economy. A government might enact expansionary spending when it is trying to increase aggregate demand for goods. Classical economics played an important role in helping the United States establish free enterprise Friedrich Hayek believed that the economy is too complicated to apply aggregates. Why did Friedrich Hayek call expansionary spending dangerous? He felt it could lead to inflation and poor decisions by consumers. The graph shows an early economic theory known as the "invisible hand." Which best describes the idea behind the "invisible hand"? Individuals seeking their own self interest benefit the economy as a whole. The graph shows Keynes's theory of aggregate demand. What is likely to happen if a new aggregate demand curve moves to the right? Prices and output would rise, and the equilibrium point will change. Monetarism plays a role in economic growth by influencing the supply of money. Which economist most likely would have agreed with the US government's intervention during an economic crisis in 2008? John Maynard Keynes What are the goals when a government uses expansionary monetary policy? Check all that apply. increasing its money supply to boost the economy increasing its money supply to speed business expansion decreasing its interest rates to increase investment spending