Macro Ch 14.1: 3 Schools

Classical/Austrian economist who believed in spontaneous order and individual freedom

• Friedrich Hayek

• Milton Friedman

• John Maynard Keynes

Ideas rose to power in the 1930s. Believed that government should do something to spark economic activity.

• Friedrich Hayek

• John Maynard Keynes

• Milton Friedman

Leader of the Monetarist school of thought. The idea that a steady money supply was key to economic growth.

• John Maynard Keynes

• Milton Friedman

• Friedrich Hayek

Deficit Spending, Macroeconomics, central planning

• monetarists

• classical

• Keynesians

Bottom Up, Laissez Faire, Free enterprise system

• classical

• monetarists

• Keynesians

The FED, Monetary Policy

• Keynesians

• classical

• monetarists

The purpose of fiscal and monetary policy is to

• make the business cycle have higher highs and lower lows

• make the business cycle more smooth and stable

• make the business cycle meet environmental and human needs

• make the business cycle disappear entirely

The FED does

• monetary policy

• fiscal policy

the President and Congress do

• fiscal policy

• monetary policy

Which school of economic thought was adopted by FDR in the 1930s?

• monetarist

• classical

• Keynesian