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 General Theory of Employment, Interest and Money was written by
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John Maynard Keynes.
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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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A government might enact expansionary spending when it is trying to
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increase aggregate demand for goods.
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Classical economics played an important role in helping the United States establish
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free enterprise
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Friedrich Hayek believed that
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the economy is too complicated to apply aggregates.
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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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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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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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Monetarism plays a role in economic growth by
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influencing the supply of money.
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Which economist most likely would have agreed with the US government's intervention during an economic crisis in 2008?
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John Maynard Keynes
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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
decreasing its interest rates to increase investment spending
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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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