Is Capitalism In Crisis?

Question 1

What caused the financial crisis in 2008?

Answer 1

During the housing boom, everyone got paid. Once employees started to lose jobs a chain reaction occurred. Investors could not receive there money even when they carried a high rating asset (AAA, AA.) Securities were poorly rating based on mortgages.

Question 2

What is Keynesian Economics?

Answer 2

Interactions in the market sometimes to do create the best outcome
A. Total spending is less than optimal level creating a recession then expansionary monetary and fiscal policies
B. Total spending is greater than optimal level generating a boom then contractionary monetary and fiscal policy

Question 3

What is Neo-classical economics

Answer 3

Straightforward

Ignore short-run fluctuations in total spending then focus on improving economic growth

Question 4

Explain the supply and demand curve

Answer 4

Dates from now-classical. Represents interaction of producers (supply) of a good/service to and consumers (demanders) of goods in a free market leads to an equilibrium price and quantity.

Question 5

Who is regarded as the founder of the discipline of Economics

Answer 5

Adam Smith

Question 6

Keynes’ The General Theory of Interest, Employment and Money was first published

Answer 6

1936

Question 7

Stagflation is a combination of

Answer 7

High inflation and high unemployment

Question 8

The global financial crisis saw what sort of economic policies re-merge in both the USA and Australia?

Answer 8

Keynesian

Question 9

All of the following formed part of the economic policy consensus in many developed countries prior to the Global Financial crisis, except?

Answer 9

A. A stable macroeconomic framework
B. More outward-looking polices
C. Using more market-based mechanisms
D. Higher tariffs ✅ «

Question 10

I’m the face of an overheated booming economy, which of the following would Keynes have recommended?

Answer 10

A. Reducing level of tariffs
B. Decreasing the level of government spending ✅ ««
C. Decreasing interest rates
D. Increasing the level of government spending

Question 11

What, in the USA, preceded the Global Financial Crisis?

Answer 11

A. A bubble in the housing market ✅ ««<
B. A spiraling rate of inflation
C. A tightening of credit conditions by the Federal Government
D. A major reduction in the deficit of the Federal Government

Question 12

A country currently has real GDP per capita of $20,000. If it were to grow at a rate of 3% pa, how many years would it take for its real GDP per capita to exceed $25,000?

Answer 12

8 years explain:

= 20,000 * (1.03)^8 gives 25,335

Question 13

In Hazlitt’s version of the Broken Window Fallacy, the opportunity cost of the window

Answer 13

Is the new suit for the baker

Question 14

At the end of 2009, Ozland has a real GDP per capita of US$36,000. It’s neighbor, Nuzild had a real GDP per capita of US$27,000. If Nuzild grew at a real rate of 5% pa and Oxland grew at a real rate of 2% pa in what year would Nuzild’ spar capita GDP overtake that of Ozland

Answer 14

2019

=27000(1.05)^10….43,980
=36000(1.02)^10….43,883