1 Schools Of Economics

Question 1

What is the fundamental belief of Austrian economic?

Answer 1

The belief in the power of the free market, private property, property rights and individual choice

Question 2

How do Austrian economists view government intervention

Answer 2

They believe the market is a completely natural institution and an inevitable consequence of freedom, any intervention is limiting individual freedom

Question 3

Beliefs of Marxism

Answer 3

Society is dominated by class struggle and the exploitation of class by another. Workers produce for the market but the market controls workers.

Question 4

How did Marx view the market?

Answer 4

As fundamentally crisis prone and imperfect. He predicted it would collapse and be replaced by natural communism

Question 5

How did Keynes view the market?

Answer 5

He thought the market economy was natural but required some intervention for it to function at its best

Question 6

What did Friedman and monetarists believe in?

Answer 6

Money neutrality which is the idea that an increase in money supply will lead to inflation but nothing else.

Question 7

What do monetarists believe the role of monetary policy is?

Answer 7

To control the money supply, hence inflation.

Question 8

What is the difference between soft and hard monetarists?

Answer 8

Soft monetarists support fiscal policy, hard monetarists don’t