Test 5 Flashcards
Who believed that government should pump money into an economy during recessions?
John Maynard Keynes
Who increased governmental control of the economy during the Great Depression through the New Deal?
Franklin Roosevelt
Who attempted to lift the American economy out of its slump by implementing policies based upon supply-side economics?
Ronald Reagan
Who is considered to be the Father of Communism?
Karl Marx
What did Edmund Burke say about the state confining its activity?
Confine it to “everything that is truly and properly public”.
What is the value of all finished goods and services produced within a country during a year’s time?
GDP
What is the value of all finished goods and services produced by a nation’s citizens during a year’s time?
GNP
What is a tool to measure a nation’s inflation?
CPI
To what does the CPI compare prices? It is also defined as an arbitrary time which is set at 100%.
Base Period
In a free market society, who makes the majority of the economic decisions?
the Private Sector
What is a complex organization made up of appointed officials and their departments?
bureaucracy
What is the term that describes high inflation combined with high unemployment?
Stagflation
What is the term that describes when demand becomes greater than the supply, creating shortages?
Demand-Pull inflation
What is an established system of political administration by which a nation is ruled?
Government
What components of the economy normally change before the rest of the economy?
Leading indicators
What is the reduction of taxes which makes more money available for private investment in capital and research called?
Supply-side economics
Which is severe and long-lasting: a recession or a depression?
Depression
When state planners in a command economy underestimate or overestimate the demand for various goods, what usually results?
Shortages and surpluses
What field of study describes the government’s role in an economy?
macroeconomicss
What part of the business cycle immediately follows the peak of its expansion?
recession
What part of the business cycle is the boom?
expansion
What are the four parts of a business cycle?
Expansion
Peak
Recession
Trough
What are 4 of the 5 ways discussed in the text by which governments can damage their economies?
Excessive taxation Inflation and debasement of money excessive public expenditure excessive regulation political plundering
What are the two primary aims of government?
Punish evil
Reward good
What divided city displayed the poverty and lack of freedom typically found in command economies?
Berlin
What is the promotion of one’s own nation regardless of moral consideration?
Nationalism
What is a system of collective ownership and control of national resources?
Socialism
What system of government has public ownership and governmental control of the production and distribution of nearly all national resources?
Communism
What system of government has “expert planners” that can better solve economic problems than natural corrections?
Keynsianism
What type of inflation occurs when businesses increase their prices to compensate for rising production costs?
Cost-push inflation
Marx saw what type of economic system as a necessary evil in the transition from feudalism to Communism?
Captialism
One of the main dangers of what economic system is deceptiveness which creeps into an economy without people realizing what is happening?
Socialism
What term refers to a perfect society under Marxist idea?
Utopia
What event in 1917 began the rise of Communism?
Bolshevik Revolution
Welfare capitalism and managed capitalism are different terms for what economic system?
Socialism
What pamphlet outlined the Communist philosophy and described the steps to establish Communism worldwide?
The Communist Manifesto
What do Communist governments forbid in an effort to control distribution?
competition
Who must be overthrown, according to Communism?
bourgeois
ESSAY:
Explain how excessive taxation can seriously harm or event destroy an economy.
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ESSAY:
Discuss some of the problems inherent in socialism. Why do people continue to accept socialistic policies in spite of its danger?
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