Question 1

In comparing monetarism and rational expectations theory we find that

Accepted Answer

A)  both favor policy rules and for the same reasons.
B)  both favor policy rules,but for different reasons.
C)  both favor discretionary policies.
D)  the former favors discretionary policy,while the latter favors policy rules.
E)  the former favors policy rules,while the latter favors discretionary policy.F) A) and B)
G) A) and C)

Question 2

Keynesians

Accepted Answer

A)  believe capitalism is inherently stable
B)  contend that government intervention in the economy is undesirable
C)  advocated a laissez faire policy
D)  believe wages and prices are inflexible downward
E)  advocate tax cuts to encourage work,savings and investmentF) B) and C)
G) C) and D)

Question 3

Which of the following groups is associated with the policy recommendation that the money stock should grow only at the rate of growth in real GDP?

Accepted Answer

A)  Monetarists
B)  Keynesians
C)  Classical quantity theorists
D)  Economic behavioristsE) A) and C)
F) A) and D)

Question 4

Classical economists believed that in the long run the economy would fix itself,thus there was no need for any government action.Which of the following economists disagreed,saying,"In the long run,we are all dead."

Accepted Answer

A)  Milton Friedman
B)  Arthur Laffer
C)  George Lucas
D)  John Maynard KeynesE) A) and C)
F) A) and B)

Question 5

The dominant school of economic thought from the 1930s into the 1960s was _________.

Accepted Answer

the Keynes...

Question 6

The crude quantity theory of money and the sophisticated quantity theory of money are approximately similar

Accepted Answer

A)  in times of deflation.
B)  in times of high unemployment.
C)  in times of full employment.
D)  in no set of circumstances.E) A) and B)
F) A) and C)

Question 7

One policy dilemma is that budget deficits necessitate massive borrowing by the government that __________ interest rates and __________ recovery.

Accepted Answer

increases;...

Question 8

Keynesians

Accepted Answer

A)  believe capitalism is inherently stable.
B)  believe the markets in a capitalistic economy are highly competitive.
C)  argue against the use of discretionary monetary policy.
D)  contend that government intervention in the economy is desirable.E) A) and D)
F) A) and C)

Question 9

The classicals,applying Say's law,believed that all our income would be ______,all our production would be _______ and all our savings would be _______.

Accepted Answer

spent;purc...

Question 10

Keynesian economists tend to believe that the private sector of the economy (households and businesses) is inherently

Accepted Answer

A)  very stable in its consumption and investment decisions.
B)  unstable in its consumption and investment decisions.
C)  smaller than the foreign trade sector of the economy.D) B) and C)
E) All of the above

Question 11

Which of the following would be considered the most prominent monetarist?

Accepted Answer

A)  John Maynard Keynes
B)  Adam Smith
C)  Karl Marx
D)  Milton Friedman
E)  Arthur LafferF) A) and B)
G) All of the above

Question 12

The output of our economy is represented by the letter _____ in the equation of exchange.

Accepted Answer

A)  M
B)  V
C)  P
D)  QE) None of the above
F) A) and B)

Question 13

The Laffer curve suggests that if tax rates get too ____,the government's tax revenues will ____.

Accepted Answer

A)  high;fall
B)  high;rise
C)  low;fall
D)  low;riseE) B) and C)
F) A) and D)

Question 14

The monetarists advocate increasing the money supply by about ________% a year.

Accepted Answer

The answer of The monetarists advocate increasing the money supply...

Question 15

Which of the following would be most likely to suggest reducing the money supply as a way to end a prolonged inflation?

Accepted Answer

A)  Monetarist
B)  Keynesian
C)  Economic behaviorists
D)  Classical economist
E)  Supply-siderF) B) and E)
G) C) and E)

Question 16

There is a(n) _______ relationship between the value of money and the quantity of money in circulation.

Accepted Answer

A)  direct
B)  inverse
C)  unpredictableD) A) and B)
E) A) and C)

Question 17

John Maynard Keynes believed that a recession was caused entirely by

Accepted Answer

A)  inadequate aggregate supply.
B)  inadequate aggregate demand.
C)  too much inflation.
D)  too much government intervention.E) B) and D)
F) B) and C)

Question 18

Given our automatic stabilizers and our tax laws,__________ are virtually inevitable during recessions.

Accepted Answer

The answer of Given our automatic stabilizers and our tax...

Question 19

Monetarists

Accepted Answer

A)  argue for the use of discretionary monetary policy.
B)  contend that government policies have reduced the stability of the economy.
C)  believe a capitalistic economy is inherently unstable.
D)  believe the markets in a capitalistic economy are largely noncompetitive.E) None of the above
F) A) and D)

Question 20

Supply-side economists would say that tax rates are generally

Accepted Answer

A)  at the level 0F.
B)  at some level below 0F.
C)  at some level above 0F.
D)  such that an increase in tax rates will increase tax revenue.E) B) and C)
F) A) and C)

Exam 15: A Century of Economic Theory

The output of our economy is represented by the letter _____ in the equation of exchange.

Correct AnswerverifiedShow Answer

Which of the following would be considered the most prominent monetarist?

Correct AnswerverifiedShow Answer

Which of the following would be most likely to suggest reducing the money supply as a way to end a prolonged inflation?

Correct AnswerverifiedShow Answer

Supply-side economists would say that tax rates are generally

Correct AnswerverifiedShow Answer

Keynesians

Correct AnswerverifiedShow Answer

John Maynard Keynes believed that a recession was caused entirely by

Correct AnswerverifiedShow Answer

The dominant school of economic thought from the 1930s into the 1960s was _________.

Correct Answerverifiedthe Keynes...View AnswerShow Answer

The Laffer curve suggests that if tax rates get too ____,the government's tax revenues will ____.

Correct AnswerverifiedShow Answer

The crude quantity theory of money and the sophisticated quantity theory of money are approximately similar

Correct AnswerverifiedShow Answer

There is a(n) _______ relationship between the value of money and the quantity of money in circulation.

Correct AnswerverifiedShow Answer

Which of the following groups is associated with the policy recommendation that the money stock should grow only at the rate of growth in real GDP?

Correct AnswerverifiedShow Answer

Keynesians

Correct AnswerverifiedShow Answer

Classical economists believed that in the long run the economy would fix itself,thus there was no need for any government action.Which of the following economists disagreed,saying,"In the long run,we are all dead."

Correct AnswerverifiedShow Answer

The classicals,applying Say's law,believed that all our income would be ______,all our production would be _______ and all our savings would be _______.

Correct Answerverifiedspent;purc...View AnswerShow Answer

Monetarists

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The monetarists advocate increasing the money supply by about ________% a year.

Correct AnswerverifiedShow Answer

One policy dilemma is that budget deficits necessitate massive borrowing by the government that __________ interest rates and __________ recovery.

Correct Answerverifiedincreases;...View AnswerShow Answer

Given our automatic stabilizers and our tax laws,__________ are virtually inevitable during recessions.

Correct AnswerverifiedShow Answer

In comparing monetarism and rational expectations theory we find that

Correct AnswerverifiedShow Answer

Keynesian economists tend to believe that the private sector of the economy (households and businesses) is inherently

Correct AnswerverifiedShow Answer

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the Keynes...
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The Laffer curve suggests that if tax rates get too ,the government's tax revenues will .

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The classicals,applying Say's law,believed that all our income would be __,all our production would be _ and all our savings would be _____.

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spent;purc...
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One policy dilemma is that budget deficits necessitate massive borrowing by the government that interest rates and recovery.

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increases;...
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