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Economic Policy: Influential Theories — Quiz Answers

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1
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Friedrich Hayek believed that

A
the economy is simply explained through behaviors.
B
individuals could not influence the economy.
C
the economy is too complicated to apply aggregates.
D
behaviors could be easily predicted.
2
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Milton Friedman led a new economic school of thought called

A
the invisible hand.
B
price signaling.
C
laissez faire.
D
monetarism.
3

A government might enact expansionary spending when it is trying to

A
decrease aggregate demand for goods.
B
slow an economic expansion.
C
increase aggregate demand for goods.
D
lower a budget deficit.
4

Milton Friedman argued that consumers are more likely to alter their behavior based on

A
short-term changes in the economy.
B
changes in the unemployment rate.
C
long-term changes in the economy.
D
changes in the inflation rate.
5

Why did Friedrich Hayek call expansionary spending dangerous?

A
He felt it could lead to inflation and poor decisions by consumers.
B
He felt it could lower available credit and cause a drop in prices.
C
He felt it could lower the money supply and cause deflation.
D
He felt it could lead to deflation and poor decisions by consumers.
6

Many classical economists such as Adam Smith believed that government should

A
intervene little in the economy.
B
intervene often in the economy.
C
always intervene in the economy.
D
totally control the economy.
8

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

A
Adam Smith.
B
Milton Friedman.
C
Friedrich August von Hayek.
D
John Maynard Keynes.
9

Monetarism plays a role in economic growth by

A
influencing the supply of goods.
B
influencing the supply of money.
C
expanding government spending.
D
expanding government intervention.
10

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

A
increase supply.
B
increase demand.
C
decrease demand.
D
increase prices.
11

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

A
Friedrich August von Hayek.
B
Milton Friedman.
C
John Maynard Keynes.
D
Adam Smith.
12

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 deflation and poor decisions by consumers.
C
He felt it could lead to inflation and poor decisions by consumers.
D
He felt it could lower available credit and cause a drop in prices.
14

A government might enact expansionary spending when it is trying to

A
decrease aggregate demand for goods.
B
lower a budget deficit.
C
slow an economic expansion.
D
increase aggregate demand for goods.
15

Milton Friedman led a new economic school of thought called

A
monetarism.
B
the invisible hand.
C
price signaling.
D
laissez faire.
16

A government might enact expansionary spending when it is trying to

A
increase aggregate demand for goods.
B
decrease aggregate demand for goods.
C
lower a budget deficit.
D
slow an economic expansion.
17

Milton Friedman led a new economic school of thought called

A
monetarism.
B
price signaling.
C
the invisible hand.
D
laissez faire.
18

Many classical economists such as Adam Smith believed that government should

A
always intervene in the economy.
B
intervene little in the economy.
C
totally control the economy.
D
intervene often in the economy.
19

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

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

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