________ advocated laissez-faire, the belief that natural market forces, such as changes in prices, wages, and interest rates, would resolve expansionary or contractionary gaps. In contrast, ________ argued that prices and wages were not flexible enough for markets to self-adjust, and advocated discretionary fiscal policy
a. Keynes; classical economists
b. Chairman Mao; Herbert Hoover
c. Keynes; Ronald Reagan
d. Classical economists; Keynes
d
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The cost effect implies that
A. Higher costs are reflected in higher average prices. B. The aggregate demand curve is downward-sloping. C. The aggregate supply curve is linear. D. Lower average prices result in greater quantity supplied.
A basic criticism of supply-side economics is that:
A. empirical research clearly shows that incentives to work and invest vary directly with marginal tax rates. B. lower taxes will increase aggregate supply much more than they will increase aggregate demand. C. lower taxes will increase aggregate demand much more than they will increase aggregate supply. D. higher taxes will reduce incentives to work, invest, and innovate.
When output increases by 1%, the unemployment rate ________ in the short run because as output increases, the size of the labor force increases.
A. tends to rise by 1% B. does not tend to fall by 1% C. tends to fall by 1% D. tends to rise by less than 1%
If the government tightens up on drug dealers and raises the costs of dealing illegal drugs, then the drug addicts' dollar expenditures to feed their addiction will tend to:
A. Increase because their demand is price-elastic B. Decrease because their demand is price-Inelastic C. Decrease because their demand is price-elastic D. Increase because their demand is price-Inelastic