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ECO202-Test 1 Review - CHAPTER 1 1 The precautionary...

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CHAPTER 1: 1/ The precautionary principle states that … We should err on the side of caution when dealing with natural systems or human health. 2/ Which one of the following is a positive statement? Most economists believe the unemployment rate will increase next year. 3/ Classical economists tend to believe that an economy will achieve full employment in the long run. True. 4/ Monetarists believe the growth of the money supply should be constantly adjusted according to the prevailing economic conditions. False. 5/ Keynesian economics argues that the main way to get an economy out of a slump is to… use fiscal policy to increase aggregate demand. 6/ The most famous Classical economist was John Maynard Keynes. False. 7/ Keynesian economists prefer the use of fiscal policy over monetary policy. True. 8/ Keynesian economics originated during what period? The Great Depression 9/ Living standards growth is possible even in the absence of economic growth. True. 10/ The Classical Period in economics occurred after the Great Depression. False. 11/ Which one of the following statements is FALSE? In recent years GDP growth has been evenly distributed across countries. 12/ According to the text, the three major macroeconomic goals are … good living standards, stability and security, and sustainability. 13/ The term “laissez-faire” would be applied to which type of economy? An economy with limited government regulation. 14/ The term “well-being” refers to the broad goal of promoting the sustenance and flourishing of life. True. 15/ The term used to refer to fluctuations in the level of national production is … the business cycle. 16/ The economic synthesis that resulted after the 1970s states that the use of fiscal and monetary policy can only be effective in the long run. False. 17/ Making sure that a country’s currently favorable macroeconomic environment will continue into the future would be part of which macroeconomic goal? Sustainability 18/ “Economic growth in Spain was 4% last year” is an example of a positive statement. True.
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19/ Which one of the following statements is NOT associated with Classical economics? Fiscal policy should be used to influence the level of aggregate demand. 20/ Say’s Law states that demand creates its own supply. False. 21/ Monetarist economists argued that the government should primarily focus on … keeping the money supply steady. 22/ John Maynard Keynes believed that the key to increasing aggregate demand is to have the government take a more active role in investment True. 23/ The four essential economic activities are … production, consumption, distribution, and resource maintenance. 24/ Classical economics is best characterized with which statement below?
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