68. According to the Austrian school of thought, what should the government do t
ID: 1125851 • Letter: 6
Question
68. According to the Austrian school of thought, what should the government do to address business cycles? a. Stop inflating money. b. Don’t bail out firms. c. Don’t encourage consumption. d. All of the above. e. Only A and B of the above. 69. What role does the Federal Reserve play in the performance of our economy according to the Austrian Business Cycle Theory? a. It distorts our view of savings, making it impossible to tell whether we have enough resources to complete all of our investment projects. b. It helps to match the investments made by the investors with resources needed to carry out these investments. c. It generates savings directly, making it possible to complete our investment projects faster. d. It protects savings with a guarantee that money will be worth more when you use it later than it is worth now. e. It protects savings with a guarantee that money will be worth only 10% less when you use it later than it is worth now . 70. What conclusion(s) are drawn from the Austrian Business Cycle theory? a. There is a market mechanism that causes inflation. b. There is a market mechanism that causes business cycles. c. Inflation is the real problem that we face, not a symptom. d. All of the above. e. None of the above. 71. As Rothbard explains, with the Bretton Woods system in place: a. Europe and the U.S. were restored to a gold standard. b. foreign countries were allowed to maintain dollar reserves to back their currencies. c. the U.S. refused to sell gold on the market even if the price rose. d. the U.S. redeemed gold for dollars only to foreign central banks at $100 per ounce. e. All of the above.
Explanation / Answer
68. e. Only A and B of the above.
because they thought that bussiness cycle is a result of ecessive credit gowth that keeps the intrest rate low.
69. b. It helps to match the investments made by the investors with resources needed to carry out these investments.
because fedral bank creates excess supply of money such that intrest rates are kept low. low intrest rate didn't incentivize people to save more.
70. b. There is a market mechanism that causes business cycles
because according to austrian school business cycles is the consequence of excessive growth in bank credit because of low intrest rate in the market.
71. e. All these are correct referring to situatins after world war II
71.
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