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Can you pick the Modern Economic Theories?
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Select the theory that goes with each statement, clue, or question.
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The economy moves to full employment in the long run.
The economy moves to full employment automatically if the government stays out of the way.
The economy can be in equilibrium way below full employment.
In the long run, people take rational and appropriate actions.
The only way to fix a recession is through an unexpected economical change.
All problems in an economy can be fixed by steadily adding money to the economy.
Fix a recession by deficit spending or cutting taxes (or both).
Inflation is a result of too much regulation on businesses.
Too little aggregate supply is a main cause of inflation.
Shocks outside the economy cause inflation.
The only cure for inflation is patience.
The only cure for inflation is a steady 3% increase of the money supply.
The only cure for inflation is less government regulation of the economy.
The only cure for inflation is to increase taxes.
Best-known advocate: Adam Smith
Best-known advocate: John Maynard Keynes
Best-known advocate: Milton Friedman
Best-known advocate: Ronald Reagan
Best-known advocate: John Muth
'Supply creates its own demand'
'There is no such thing as a free lunch'
'Government is not the answer; government is the problem!'
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Modern Economic Theories Quiz
Created Dec 31, 2012 in
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