Chapter 17: Economics

Question 1

The government should create the level of demand

Answer 1

Keynesian Economics

Question 2

Assumes that the health of the economy depends on what is spent/saved by the people

Answer 2

Keynesian Economics

Question 3

According to Keynesian Economics, if the demand is too low, the government should do what?

Answer 3

Pump money into the economy (deficit spending)

Question 4

According to Keynesian Economics, if the demand is too high, the government should do what?

Answer 4

Take money out of the economy by increasing taxes

Question 5

The free market is too undependable to ensure economic activity

Answer 5

Planning

Question 6

Government should plan parts of a country’s economic activity

Answer 6

Planning

Question 7

Wage-price controls and industrial policy (gov. directs all industrial investments)

Answer 7

Planning

Question 8

The price of all things is determined by the supply and demand

Answer 8

Trickle Down Economics/ Supply- Side Economics

Question 9

Inflation is caused by not enough supply of goods, making goods cost more

Answer 9

Trickle Down Economics/ Supply- Side Economics

Question 10

Increasing the supply of goods reduced prices (supply side)

Answer 10

Trickle Down Economics/ Supply- Side Economics

Question 11

There is a need for less government interference in the market and lower taxes

Answer 11

Trickle Down Economics/ Supply- Side Economics

Question 12

The rich get richer and the greater wealth trickles down to he middle and poor class

Answer 12

Trickle Down Economics

Question 13

Combination of monetarism, supply-side tax cuts, and domestic budgeting being cutt

Answer 13

Reaganomics

Question 14

Goals are not entirely consistent

Answer 14

Reaganomics

Question 15

Reduction in the size of the federal government

Answer 15

Reaganomics

Question 16

Stimulates economic growth and increases military strength

Answer 16

Reaganomics

Question 17

What is one main effect of Reaganomics

Answer 17

Stimulated Economy

Question 18

Unemployment decreases, business activity increase

Answer 18

Stimulated Economy

Question 19

Created by Milton Friedman

Answer 19

Monetarism

Question 20

Asserts that inflation occurs when there is too much money chasing too few goods

Answer 20

Monetarism

Question 21

Effective control of the economy occurs with the manipulation of the money supply

Answer 21

Monetarism

Question 22

Interest rates fluctuate depending on inflation (FDR does this)

Answer 22

Monetarism

Question 23

What are the 5 budgeting theories

Answer 23

Monetarism
Keynesian Economics
Planning
Trickle-Down/ Supply-Side
Reganonomics

Question 24

What is an example of Monetarism

Answer 24

The Federal Reserve System