AnswersHSA 26-27 EconomicsEconomic Policy: Influential Theories

5.4 Economic Policy: Influential Theories Answers

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A government might enact expansionary spending when it is trying to

A
increase aggregate demand for goods.
B
decrease aggregate demand for goods.
C
slow an economic expansion.
D
lower a budget deficit.
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

Milton Friedman led a new economic school of thought called

A
laissez faire.
B
monetarism.
C
price signaling.
D
the invisible hand.
4

John Maynard Keynes believed that governments should increase spending in order to

A
increase prices.
B
increase supply.
C
decrease demand.
D
increase demand.
6

Milton Friedman led a new economic school of thought called

A
laissez faire.
B
monetarism.
C
price signaling.
D
the invisible hand.
7

Which occurred during the Great Depression? Check all that apply.increased aggregate demandnew forms of moneyfalling wagesincreasing pricesplummeting growthsurging unemployment

A
increased aggregate demand
B
new forms of money
C
falling wages
D
increasing prices
E
plummeting growth
F
surging unemployment
8

How did Adam Smith’s economic ideas help the United States establish a free enterprise system? Check all that apply.

A
They led to freedom of choice for consumers and producers.
B
They led to fixed prices for consumers and producers.
C
They led to open competition for consumers.
D
They led to individual ownership of property.
E
They led to more government spending and increased demand.
F
They led to limited choice and communal ownership of property.
10

How did Adam Smith’s economic ideas help the United States establish a free enterprise system? Check all that apply.

A
They led to freedom of choice for consumers and producers.
B
They led to fixed prices for consumers and producers.
C
They led to open competition for consumers.
D
They led to individual ownership of property.
E
They led to more government spending and increased demand.
F
They led to limited choice and communal ownership of property.
11

Monetarism plays a role in economic growth by

A
expanding government intervention.
B
influencing the supply of goods.
C
expanding government spending.
D
influencing the supply of money.
12

The General Theory of Employment, Interest and Money was written by

A
John Maynard Keynes.
B
Adam Smith.
C
Milton Friedman.
D
Friedrich August von Hayek.
13

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.
14

What are the goals when a government uses expansionary monetary policy? Check all that apply.

A
increasing its money supply to boost the economy
B
decreasing its money supply to slow the economy
C
increasing its money supply to speed business expansion
D
decreasing its money supply to curb business expansion
E
decreasing its interest rates to increase investment spending
15

What are the goals when a government uses expansionary monetary policy? Check all that apply.increasing its money supply to boost the economydecreasing its money supply to slow the economyincreasing its money supply to speed business expansiondecreasing its money supply to curb business expansiondecreasing its interest rates to increase investment spending

A
increasing its money supply to boost the economy
B
decreasing its money supply to slow the economy
C
increasing its money supply to speed business expansion
D
decreasing its money supply to curb business expansion
E
decreasing its interest rates to increase investment spending
16

free enterprisegovernment regulationKeynesian economicsmonetary policy

A
free enterprise
B
government regulation
C
Keynesian economics
D
monetary policy
17

John Maynard Keynes believed that governments should increase spending in order to

A
increase prices.
B
increase supply.
C
decrease demand.
D
increase demand.
18

A government might enact expansionary spending when it is trying to

A
increase aggregate demand for goods.
B
decrease aggregate demand for goods.
C
slow an economic expansion.
D
lower a budget deficit.
19

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.
20

Who was known as the "Father of Economics,” whose ideas of free markets inspired classical economic thinkers?

A
John Keynes
B
Milton Friedman
C
Friedrich Hayek
D
Adam Smith

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