ScienceEconomicsEconomic Policy: Influential Theories example #46321
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Economic Policy: Influential Theories

Olida Green avatar Olida Green
25 July 2022
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question
The graph shows how individuals affect economic growth. Which best describes how individuals help the economy grow?
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They work in their own self-interest.
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Milton Friedman argued that consumers are more likely to alter their behavior based on
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long-term changes in the economy
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How did Adam Smith's economic ideas help the United States establish a free enterprise system? Check all that apply.
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*they led to freedom of choice for consumers and producers *they led to open competition for consumers *they led to individual ownership of property
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The graph shows an early economic theory known as the "invisible hand." Which best describes the idea behind the "invisible hand"?
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Individuals seeking their own self interest benefit the economy as a whole.
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friedrich hayek believed that
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the economy is too complicated to apply aggregates
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Which best summarizes the philosophical difference between economists John Maynard Keynes and Adam Smith?
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Keynes said government was the key to solving economic issues, while Smith believed government should take a hands-off approach.
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A government might enact expansionary spending when it is trying to
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increase aggregate demand for goods
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Why did Friedrich Hayek call expansionary spending dangerous?
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He felt it could lead to inflation and poor decisions by consumers.
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Monetarism plays a role in economic growth by
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influencing the supply of money
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the General Theory of Employment, Interest and Money was written by
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John Maynard Keynes
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Which occurred during the Great Depression? Check all that apply.
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*falling wages *plummeting growth *surging unemployment
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John Maynard Keynes believed that governments should increase spending in order to
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increase demand
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The graph shows Keynes's theory of aggregate demand. What is likely to happen if a new aggregate demand curve moves to the right?
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prices and output would rise, and the equilibrium point will change
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What are the goals when a government uses expansionary monetary policy? Check all that apply.
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*increasing its money supply to boost the economy *increasing its money supply to speed business expansion
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Milton Friedman led a new economic school of thought called
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monetarism