BEC Economic Theory Review 9

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Joens1313
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299723
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BEC Economic Theory Review 9
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2015-04-02 00:02:20
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BEC Economic Theory Review
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BEC Economic Theory Review 9
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  1. What is the classical economic theory?
    Classical Economic theory holds that an economy is in equilibrium at full employment, the economy generates and maintains full employments over the long run without artificial intervention due to price and wage flexibility.
  2. ----------------------- theory holds that an economy is in equilibrium at full employment, the economy generates and maintains full employments over the long run without artificial intervention due to price and wage flexibility.
    Classical Economic theory holds that an economy is in equilibrium at full employment, the economy generates and maintains full employments over the long run without artificial intervention due to price and wage flexibility.
  3. What is the Keynesian Economic theory?
    Keynesian Economic theory holds that an economy can be in equilibrium at less than full employment.  It focuses on spending and fiscal policy as determinates of economic activity.
  4. ----------------------------- theory holds that an economy can be in equilibrium at less than full employment.  It focuses on spending and fiscal policy as determinates of economic activity.
    Keynesian Economic theory holds that an economy can be in equilibrium at less than full employment.  It focuses on spending and fiscal policy as determinates of economic activity.
  5. What is Liquidity Preference?
    Liquidity Preference is the demand for money influenced heavily by liquidity preference which depends on motives for holding money.
  6. What are the 3 motives of Liquidity preference?
    • 1. Transaction Motive
    • 2. Precaution Motive
    • 3. Speculative Motive
  7. With regard to Liquidity Preference, what is the transaction motive?
    Money is held to facilitate day-to-day business transactions
  8. With regard to Liquidity Preference, what is the Precaution motive?
    Money is held for contingencies
  9. With regard to Liquidity Preference, what is the Speculative motive?
    Money is held while waiting for more favorable investment conditions to arise.
  10. What is the Monetarist Economic Theory?
    The monetarist economic theory is a steady restrained growth of money supply is more significant than fiscal policy on economic activity, inflation, and employment
  11. What is the Supply side Economic Theory?
    The Supply side economic theory states that cutting taxes stimulates work, savings, and investments and restores incentive to economy
  12. What is the Neo-Keynesian  Economic Theory?
    A combination of Keynesian and monetarist economic theories fiscal policy influences economic activities but excessive monetary growth leads to inflation.  At some unemployment levels, money supply growth primarily leads to increases in output along with some inflation.

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