Question

2 PART MULTIPLE CHOICE QUESTIONS FROM THE ECONOMIC WAY OF THINKING:

The dominant view among economists prior to the 1930s was that recessions were:

A A temporary consequence of widespread but erroneous expectations

B Caused by labor unions

C Caused by extensie use of machinery

D The result of misdistribution of income

E The result of too much money in circulation

Who wrote The Communist Manifesto?

A John Kenneth Galbraith

B John Maynard Keynes

C Karl Marx and Frederick Engels

D Adam Smith

E No answer text provided

If monetary equilibrium were to occur:

A Inflation would not occur

B Deflation would not occur

C The price level would be stable

D all three would be true

E none of the three would be true

Answer 1

Question 1

Prior to 1930, economists, in general, believed that recessions are temporary aberrations that can happen in short-run due to mismatch of expectations and economy can smoothen out the frictions on its own and it will return to the long-run equilibrium on its own.

Thus, recession was considered to be a temporary consequence of widespread but erroneous expectations.

Hence, the correct answer is the option (A).

Question 2

The Communist Manifesto was authored by Karl Marx and Fredrick Engels.

Hence, the correct answer is the option (C).