Related Issue 2: Chapter 6

Question 1

What are features of the market economy?

Answer 1

Resources own by the private sector
Low govt intervention
Economic self interest
Efficiency is valued
Allocation by price

Question 2

What is another name for command economies?

Answer 2

Socialist or centrally planned economies

Question 3

What are the features of command economies?

Answer 3

Resources are owned by the state
Economic decision making is done by the government
Goods are distributed to benefit the state
Prices created by the state
Equity is valued

Question 4

What is a Mixed economy made of?

Answer 4

The features of market economies and command economies

Question 5

What is the All out approach to economies in transition?

Answer 5

Price and trade liberalization
Opening of markets
Privatization of state owned enterprises
Reform of tax, legal, and financial systems

Question 6

What is the phased approach to economies in transition?

Answer 6

Gradual price liberalization
Agricultural reform
Reform of state run enterprises
Relaxed restrictions on non-state industrial firms

Question 7

What are the advantages of market systems?

Answer 7

Economic freedom, efficiency

Question 8

what are the disadvantages of market systems?

Answer 8

Unequal distribution of income and wealth

Question 9

What are the advantages of command systems?

Answer 9

Equity

Question 10

What are the disadvantages of command systems?

Answer 10

Inefficiencies and waste

Question 11

What did the post war Canadian economy have?

Answer 11

Universal Healthcare
Canadian Pension plan
Investment Canada
CRTC
Atomic Energy of Canada Limited

Question 12

What happened as a result of Arabs using the Yom Kippur war?

Answer 12

OPEC declared an oil embargo on the nations of the west and slowed the production of oil. This caused prices to quadruples

Question 13

How was the USA affected by oil shortages?

Answer 13

Goods became more expensive and slowed the economy. Inflation and recession occured at the same time

Question 14

What is stagflation?

Answer 14

A recession when no one is spending money and price of goods increases

Question 15

How did Stagflation affect the British economy?

Answer 15

The British govt was forced to borrow US 3.9 billion from IMF

Question 16

What is Monetarism?

Answer 16

The principle that governments have a role in the amount of money circulating in the economy

Question 17

What steps were carried out in monetarism?

Answer 17

Decrease interests rate to entice people to enter the market
Decrease the amount of money printed
Decrease taxes for the business and wealthy

Question 18

What is Milton Friedman associated with?

Answer 18

Neo-conservatism aka Classical economics

Question 19

What were Milton Friedman’s ideas closely linked with?

Answer 19

Classical liberalism

Question 20

What did Classical liberalism oppose?

Answer 20

Modern liberalism

Question 21

What was Milton Friedman against?

Answer 21

The welfare state

Question 22

Why was Milton Friedman against the welfare state?

Answer 22

Because it requires large govt spending which leads to debt

Question 23

What was Milton Friedman for?

Answer 23

Fiscal responsibility and balanced budgets

Question 24

What was Milton Friedman’s Economic Practice?

Answer 24

Monetarism or Supply Side economics

Question 25

What was Friedrich Hayek critical of?

Answer 25

Collectivism

Question 26

What did Friedrich Hayek believe about collectivist societies?

Answer 26

In order for them to function the govt must have a high level of control over society. This would threaten the liberty of an individual

Question 27

What was the only way to balance supply and demand according to Hayek?

Answer 27

Using the free market system

Question 28

What were the principles of monetarism?

Answer 28

Decrease govt intervention
Downsize the public sector by privatizing businesses
Decrease taxes and lower interest rates
Control the amount of money in supply
Keep some unemployed to keep wages low
Keep govt small

Question 29

What did Reagan get into when he became president?

Answer 29

An economic crisis

Question 30

What did Reagan want for the economy?

Answer 30

Less government involvement and a more individual approach known as supply side economics

Question 31

What is another name for Reagan’s supply side economics?

Answer 31

Trickle down theory

Question 32

What did trickle down economics do in times of recession?

Answer 32

Reduce corporate taxes

Reduce public income tax

Question 33

What did supply side economics do in times of inflation?

Answer 33

Nothing. Unrestricted market growth will bring inflation under control

Question 34

What steps put Reaganism in action?

Answer 34

Tax cuts for the wealthy
Govt spending cuts in social services
Deregulation of economy

Question 35

What are the policies of thatcherism?

Answer 35

Wide scale privatization
Emphasis on individual initiative
Reduced power of labor unions
Reduced income and corporate taxes

Question 36

What are arguments in favor of Reaganism or Thatcherism?

Answer 36

A reduction in unemployment
A reduction in inflation
An increase in products
A worldwide move toward enterprise

Question 37

What was Blair’s Third Way a compromise between?

Answer 37

Keynesian economics and monetarism. Valuing individualist ideas of monetarism with collectivist ideas of social justice

Question 38

What did Blair’s third way adopt?

Answer 38

Thatcherism free market policies while maintaining social programs

Question 39

What did Blair’s third way result in?

Answer 39

Increased public spending on health care and education and introduced a minimum wage