Economicks

Question 1

What is fiscal policy

Answer 1

The governments power to tax and spend and create demand and stabilize the business cycle

Question 2

impact of John Maynard Keynes ?

Answer 2

-laissez faire
-deficit spending
-stabilize economy and reduce government control

Question 3

Monetary policy?

Answer 3

the federal reserves power to regulate the money and the supply of interest rates to stabilize the business cycle

Question 4

expansionary fiscal policy ?

Answer 4

helps speed up the economy, or increase economic growth

Question 5

contractionary fiscal policy?

Answer 5

helps slow doesn’t the economy or slow down economic growth

Question 6

balance in an economic system. What happens when monetary is higher than fiscal?

Answer 6

By raising interest rates, investment becomes more expensive and works to slow economic growth a bit

Question 7

what happens in the balance of a society when fiscal is lower on the pedestal?

Answer 7

A government budget deficit is when it spends more money annually than it takes in. If spending. is high and taxes are low for too long, such a deficit can continue to widen to dangerous levels. Debt to GDP

Question 8

What happens when monetary is lower on the pedestal?

Answer 8

-interest rates are low, over-borrowing at artificially cheap rates can occur.
-this can cause a speculative bubble whereby prices increase too quickly and to absurdly high levels.
-supply and demand are unstable

Question 9

what happens when fiscal is higher on the pedestal?

Answer 9

-a government can direct spending towards specific projects, sectors, or regions to stimulate the economy where it is perceived to be needed the most.

Question 10

fiscal austerity (contraction)?

Answer 10

-cut government spending/ raise taxes
-to avoid economic overheating and Strengthen long-run debt sustainability

Question 11

fiscal stimulus (expansion)

Answer 11

-raise government spending/ cut taxes
-to prove short tern economic status for growth and employment

Question 12

major difference between neoclassical and Neo Keynesian?

Answer 12

-main difference between wages and prices
-neo Keynesian says we won’t find balance and and equality
- and classical says we will always find balance and equality

Question 13

what policy did Keynes favour and what did it consist of?

Answer 13

counter-cyclical policy :
-depressed income, high unemployment, low inflation, low interest rates to moderate the down turn
-but fiscal contraction ( cut government spending )during boom periods

Question 14

A neoconservative would believe in a spectrum of ideas which include?

Answer 14

-reduced taxes
- no government intervention in the economy (regulation are okay)
-return to tradition no gay marriage, no abortion
- military action to protect their beliefs/country
neo= means new

Question 15

How would someone who believed in marxism run the economy?

Answer 15

state owns, plans, and controls the means of production

Question 16

how would someone who believed in Keynesian economics run the economy?

Answer 16

state actively manages the monetary policy supposedly to manage the booms and busts in economic activity

Question 17

How would someone who believed in monetarist run the economy?

Answer 17

state has ownership of money but there is no active management of monetary policy

Question 18

how would someone who believed in Austrian economics run their economy?

Answer 18

state performs at most functions: maintaining sanctity of contracts and guaranteeing protection of private property (police, army)

Question 19

who is Freidrich Von Hayek an anti-keynesian revolution and what did he believe in?

Answer 19

argued that the role of government should only be to protect private property and encourage a healthy economy through competition

Question 20

who is Milton Friedman and what did he believe in?

Answer 20

he was a monetarist- don’t want demand to be increase through government sending, but through monetary policy
- instead of focusing on increasing demand by giving people jobs, supply-side economics wants to focus on the producers of goods - the suppliers
- the idea is that money will trickle down from business owners to the workers

Question 21

what are the four pillars of reaganomics?

Answer 21

1. reduce government spending
2. reduce marginal tax rates on income from labor and capital- top percentage earners
3. reduce government regulation of the economy
4. control the money supply to reduce inflation- raise interest rates

Question 22

what do classical liberal and Neo-conservative economic beliefs argue for?

Answer 22

• flat tax- everyone pays the same percentage (except for the very poor)
  -this is seen as more fair by classical liberals
  -fair in that it punishes each person equally

Question 23

what is the issue with mixed economies

Answer 23

paying for services is very expensive and does not allow people the choice to access better services if they can afford it

Question 24

Subsidies are the major component of what?

Answer 24

welfare capitalism- who gets what?
- these susbsideies exist because a nation’s desire to have economic success means supporting industries during booms and busts

Question 25

what preceded the Chinese economic miracle?

Answer 25

1962 the Great Leap Forward: the result was the “great Chinese famine”. Estimates of up to 45 million died of starvation, while 200 million suffered from serious malnutrition.

Question 26

who is Deng Xiaoping?

Answer 26

comes to power and says we are going to reform who and what we are not get rid of communist party but get rid of command economics.

Question 27

What was stage one off the Chinese economic miracle?

Answer 27

decollectivism of agriculture, and farmers were granted a long term lease and are allowed to sell there produced as a private market
- special economic zones were also created- they permitted investment and encouraged entrepreneurs to start up businesses.

Question 28

what was stage two of the Chinese economic miracle?

Answer 28

-putting up the state run enterprises on the stock market. People can purchase stocks that reduce government planners These are called interest entity structures

Question 29

What is chinas energy trap?

Answer 29

-china became a net importer of oil in 1993 and natural gas in 2007
-causing it to focus on the development of relationship with other countries for access to chap and natural resources

Question 30

what is the one belt, one road initiative?

Answer 30

• it is a systematic project of peace cooperation, openness and inclusiveness and mutual benefit
• included a continental track on the Silk Road
• intents to further the connectivity of asian and African continents

Question 31

why did Keynes support deficit financing?

Answer 31

he saw it necessary to be used at a time of Great Depression/ The new deal did not end the depression and opposition grew among some groups against the program. Some did not like to socialize the economy and thought the federal government was getting too much control over industry and agriculture.

Question 32

what were the three R’s of the new deal

Answer 32

1. relief- giving relief to the unemployed and badly hurt farmers
2. reform- reform of business and financial practices
3. recovery- recovery of the economy

Question 33

who is Keynes and what did he believe in?

Answer 33

believed that the government could increase spending during a recession to counteract the decrease in consumer spending
- argued that fiscal policy can be used to fight both recession or depression and inflation
- Keynesian economics believe that the economy is composed of three sectors- individuals, businesses and government and that government actions can make up for changes.

Question 34

what was the impact of FDR’s new deal politically?

Answer 34

• rejected conservative policies and began a new era of unprecedented government activism to solve americas problem
• government intervention to control and stabilize the natural cycle of the demand for goods and services

Question 35

what was the economic impact of the new deal?

Answer 35

the new deal helped relieve unemployment and provided long-term economic reforms, but it failed to end the Great Depression

Question 36

what is the command planning of a command economy?

Question 37

what steps did FDR tale to stabilize the system?

Answer 37

1. insurance program by the government
2. security and exchange commission regulating trades
3. glass steagall act which was the regulation of banks

Question 38

how did the 2008 housing crisis become an outcome of the tradition from modern to classical liberalism?

Answer 38

there was stagflation which is the mixing of rising inflation and because cost going up and not enough business is happening so higher unemployment