Question

1. Which of the following approaches can NOT be considered a subcategory of the Classical approach?

a. Monetarist

b. Rational Expectations

c. Heterodox

d. Supply-Side

2. Which of the following is correct?

a. The Great Recession Financial crisis in 2018/2019 started shortly after Barack Obama because president.

b. Shortly after the General Theory by J.M. Key was published its popularity started to increase, and its popularity and influence has continued to steadily increase over time.

c. The Federal Reserve System(the fed) is the only national bank that has existed in the U.S.

d. An "American Political Liberal" or "progressive" may oppose "liberalization" of international trade.

3. Who said " I am now a Keynesian in Economics"

a. Democratic President Bill Clinton in 1996

b. Fed Chair Alan Greenspan in 1987

c. Republican President Richard Nixon in 1971

d. Milton Friedman in 1969

4. Which of the following correctly reflects a difference between Keynesian and Classical perspectives?

a. Keynesian models imply that "demand creates supply", while Classical models imply" supply creates demand."

b. Keynesian models are macroeconomic while Classical models are microeconomic.

c. Keynesian economists focus on price adjustment run while Classical Economists focus on quantity adjustment as a force moving the economy to equilibrium.

d. Keynesian economists focus on the long run while Classical Economists focus on the short run.

Answer 1

1. The correct answer is heterodox school of thought.

This is because heterodox school of thought actually contrasts with orthodox schools of thought.

The monetarist school of thought emphasises on the role of money supply extending the classical principles only.

Supply side economists are classical economists only who believe that supply is the major determinant in the economy.

Rational expectations school of thought also focusses on the classical principles.

2. The correct statement is d). An Americal liberal might oppose liberalisation of international trade.

The other statements are incorrect because the popularity of general theory declined in the 1970s. Also, the federal reserve is not a national bank but a uniques system of institutions which qualifies for central bank.

3. The correct answer is c. Richard Nixon in 1971.

Nixon said this after taking the US off the gold standard.

4. The correct answer is a. Keynes focussed on aggregate demand as a major determinant of output in the economy. On the other hand, classicals said that supply will create its own demand and the markets will clear itself.