Which of the following schools of economic thought is decidedly opposed to government intervention in the macroeconomy?
A. monetarism
B. new classical
C. Keynesian
D. both A and B
Answer: D
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Let us define the real wage as the purchasing power of one hour of labor. In the Ricardian 2X2 model, if two countries under autarky engage in trade then
A) the real wage will not be affected since this is a financial variable. B) the real wage will increase only if a country attains full specialization. C) the real wage will increase in one country only if it decreases in the other. D) the real wage will rise in both countries. E) the real wage will fall under pressure of international competition.
Stagflation at the end of the 1970s was marked by increasing inflation and unemployment
Indicate whether the statement is true or false
The main criticism leveled at the rational expectations school of economic thought is that
A. they assume too much influence due to monopoly power. B. they just go too far in ascribing rationality to the general population. C. the assumption that the velocity of circulation is predictable in the short run is not borne out by the facts. D. the assumption that labor union contracts create a rigid wage structure is unrealistic.
A contractionary fiscal policy will reduce a government budget deficit or increase a government budget surplus and reduce borrowing by the Treasury.
a. true b. false