Chapter 7

Question 1

wrote “The Theory of Leisure Class”

Answer 1

Thorstein Veblen

Question 2

coined the concept of conspicuous consumptions and conspicuous leisure

Answer 2

Thorstein Veblen

Question 3

is the spending of money and acquiring of luxury goods and services to publicly display the economic power of the income or the accumulated wealth of buyer

Answer 3

Conspicuous Consumption

Question 4

is employed when non-productivity can be more effectively demonstrated through lavishness

Answer 4

Conspicuous consumption

Question 5

American Capitalism: The Concept of Countervailing Power.

Answer 5

John Kenneth Galbraith

Question 6

was one of the most widely
read economists in the United States. One reason is that he wrote so well, with the ability to turn
a clever phrase that made those he argued against look foolish

Answer 6

John Kenneth Galbraith

Question 7

in which he contrasted the affluence of the private sector with the squalor of the public sector

Answer 7

John Kenneth Galbraith - The Affluent Society

Question 8

was an American economist known for his theories
on industrial monopolies and competition

Answer 8

Edward Hastings Chamberlain

Question 9

a book thats purred discussion of competition, especially between firms whose consumers have preferences for particular products and firms that control the prices of their products without being monopolists

Answer 9

Theory of Monopolistic Competition by Edward Hastings Chamberlain

Question 10

is the economist who coined the term product differentiation.

Answer 10

Edward Hastings Chamberlain

Question 11

was arguably the only woman born before 1930 who can be considered a great economist

Answer 11

Joan Violet Robinson

Question 12

Robinson’s first major book was ______________ In it she laid out a model of competition between firms, each of which had some monopoly power.

Answer 12

The Economics of Imperfect Competition.

Question 13

was the first to define macroeconomics, which became
a separate field of inquiry only with Keynes’s book, as the_________________________

Answer 13

Joan Violet Robinson, “theory of output as a whole”

Question 14

An English economist, whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.

Answer 14

John Maynard Keynes

Question 15

he spearheaded a revolution in economic
thinking, challenging the ideas of neoclassical economics that held that free markets would, in the
short to medium term, automatically provide full employment, as long as workers were flexible in
their wage demands.

Answer 15

John Maynard Keynes

Question 16

he advocated the use of fiscal and monetary policies to mitigate the adverse effects
of economic recessions and depressions.

Answer 16

Keynes

Question 17

focuses on explaining why recessions and depressions occur and
offering a policy prescription for minimizing their effects.

Answer 17

Keynesian Economics

Question 18

is not always automatically high enough to provide firms with an
incentive to hire enough workers to reach full employment.

Answer 18

Aggregate Demand (AD)

Question 19

– income, employment, price at a normal, investment, consumption,
profit, demand for goods/services–they increase, but with low interest rates

Answer 19

Expansion (Recovery)

Question 20

is an increase in the level of economic activity, and of the goods and services available. It is a period of economic growth as measured by a rise in real GDP.

Answer 20

Economic Expansion

Question 21

income, employment, price at a normal, investment, consumption,
profit, demand for goods/services—they are at maximum

Answer 21

Peak (Prosperity)

Question 22

is a business cycle contraction when there is a general decline in economic
activity. Generally occur when there is a widespread drop in spending.

Answer 22

Recession

Question 23

• income, employment, price at a normal, investment, consumption,
  profit, demand for goods/services—they are at the lowest level, stagflation

Answer 23

Depression (Trough)

Question 24

was the twentieth century’s most prominent advocate of free markets.

Answer 24

Milton Friedman

Question 25

Friedman established himself in 1945 with ___________

Answer 25

Income from Independent Professional
Practice, coauthored with Simon Kuznets

Question 26

took on the Keynesian view that individuals and households adjust their expenditures on consumption to reflect their current income. He showed that, instead, people’s annual consumption is a function of their “permanent income,” a term he introduced as a measure of the average income people expect over a few years.

Answer 26

A Theory of the Consumption Function by Milton Friedman

Question 27

stated that in the long run, increased monetary growth increases prices but has little or no effect on output. In the short run, he argued, increases in money supply growth cause
employment and output to increase, and decreases in money supply growth have the opposite
effect

Answer 27

Studies in the Quantity Theory of Money by Milton Friedman

Question 28

Friedman’s solution to the problems of inflation and short-run fluctuations in employment
and real GNP was?

Answer 28

a so-called money-supply rule

Question 29

If any twentieth-century economist was a Renaissance man, it was?

Answer 29

Friedrich hayek

Question 30

Hayek was the best-known advocate of what is now called ?

Answer 30

Austrian Economics

Question 31

One cause, he said, was increases in the money supply by the central bank. Such
increases, he argued in ______________, would drive down interest rates, making credit
artificially cheap.

Answer 31

Prices and Production, Friedrich Hayek

Question 32

“Can CAPITALISM survive? No. I do not think it can.”

Answer 32

Joseph Schumpeter

Question 33

he believed that capitalism would be destroyed by its successes, that it would
spawn a large intellectual class that made its living by attacking the very bourgeois system of
private property and freedom so necessary for the intellectual class’s existence

Answer 33

Joseph Schumpeter

Question 34

It is also a sparkling DEFENSE of capitalism on the grounds that capitalism
sparks

Answer 34

ENTREPRENEURSHIP

Question 35

____________ by the entrepreneur, argued Schumpeter, leads to gales of______________ as innovations cause old inventories, ideas, technologies, skills, and equipment to
become obsolete

Answer 35

Innovation, “CREATIVE
DESTRUCTION”

Question 36

Schumpeter argued with the prevailing view that_______________ was the way to
maximize economic well-being.

Answer 36

“perfect” COMPETITION

Question 37

argued with the prevailing view that “perfect” COMPETITION was the way to
maximize economic well-being. Under perfect competition all firms in an industry produce the
same good, sell it for the same price, and have access to the same technology

Answer 37

Joseph Schumpeter

Question 38

He argued on this basis that some degree of ____________ is preferable to perfect
competition

Answer 38

Joseph Schumpeter, MONOPOLY

Question 39

was also a giant in the history of economic thought. His magnum opus in the
area is History of Economic Analysis, edited by his third wife, Elizabeth Boody, and published
posthumously in 1954. In it Schumpeter made some controversial comments about other
economists, arguing that ADAM SMITH was unoriginal, ALFRED MARSHALL was confused,
and LEON WALRAS was the greatest economist of all time.

Answer 39

Joseph Schumpeter

Question 40

was the quintessential empirical economist. Paging through his
classic microeconomics text The Theory of Price, one is struck by how many principles of
economics are illustrated with real data rather than hypothetical examples.

Answer 40

George Stigler

Question 41

He’s more on Government Regulation. . Because of his research, economists view regulation much more skeptically than their counterparts of the 1950s did.

Answer 41

George Stigler

Question 42

“The economic role of the state,” he
said, “has managed to hold the attention of scholars for over two centuries without arousing their curiosity.” He added, “Economists have refused either to leave the problem alone or to work on it.”

Answer 42

George Stigler

Question 43

____________ is also a problem for firms when they collude, implicitly or explicitly, to set
prices. They do not know whether their competitors are secretly undercutting them. This uncertainty can be reduced, wrote Stigler, by spending resources to gather information. Stigler applied this insight to show that ______ is less likely to succeed if there are more firms in a market.

Answer 43

Information, Collusion

Question 44

he received the 1992 Nobel Prize in economics for “having extended the
domain of economic theory to aspects of human behavior which had previously been dealt with—if at all—by other social science disciplines such as sociology, demography and criminology.”

Answer 44

Gary S. Becker

Question 45

______unusually wide applications of economics started early. In 1955 he wrote his
doctoral dissertation at the University of Chicago on the economics of _________

Answer 45

Gary Becker’s, Discrimination

Question 46

In the early 1960s Becker moved on to the fledgling area of ________

Answer 46

Human Capital

Question 47

Applying the economist’s concept of __________, ________ showed that as market wages rose, the cost to married women of staying home would rise. They would want to work outside the home and economize on household tasks by buying more appliances and fast food.

Answer 47

Oppotunity Cost, Gary Becker

Question 48

extended his insights on allocation of time within a family, using the
economic approach to explain the decisions to have children and to educate them, and the
decisions to marry and to divorce.

Answer 48

1970, Becker