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Chapter 21: Problem 12

Supply-side economics is most closely associated with a. Karl Marx. b. John Maynard Keynes. c. Milton Friedman. d. Ronald Reagan.

Short Answer

Expert verified
d. Ronald Reagan.

Step by step solution

01

Karl Marx

Karl Marx was a German philosopher and economist most closely associated with socialism and communism. His economic theories were focused on labor and the idea that economic value comes from the workers. He is not associated with supply-side economics.
02

John Maynard Keynes

John Maynard Keynes was a British economist who developed Keynesian Economics. His theories emphasized the importance of government intervention in the economy to stabilize fluctuations in output, employment, and prices, particularly during economic downturns. Keynesian Economics primarily focuses on the demand-side of an economy. Therefore, Keynes is not associated with supply-side economics.
03

Milton Friedman

Milton Friedman was an American economist who was a proponent of free-market capitalism and monetarism. He emphasized the importance of controlling the money supply and limiting government intervention in the economy for achieving economic stability. Although some of his ideas might have influenced supply-side economics, he is not considered the primary figure associated with it.
04

Ronald Reagan

Ronald Reagan was the 40th President of the United States and a staunch advocate of supply-side economics. His economic policies, often referred to as "Reaganomics," were based on the idea that reducing taxes and regulation would stimulate economic growth and production by encouraging businesses and individuals to invest and produce more, thus leading to a stronger economy. Consequently, he is most closely associated with supply-side economics among the given options. Therefore, the correct answer is: d. Ronald Reagan.

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Most popular questions from this chapter

The sum of the marginal propensity to consume \((M P C)\) and the marginal propensity to save \((M P S)\) always equals a. 1 b. 0 c. the interest rate. d. the marginal propensity to invest \((M P I)\)

Suppose inflation is a threat because the current aggregate demand curve will increase by \(\$ 600\) billion at any price level. If the marginal propensity to consume \((M P C)\) is \(0.75,\) federal policymakers could follow Keynesian economics and restrain inflation by a. decreasing taxes by \(\$ 600\) billion. b. decreasing transfer payments by \(\$ 200\) billion. c. increasing taxes by \(\$ 200\) billion. d. increasing government spending by \(\$ 150\) billion.

Assume the economy is in recession and real GDP is below full employment. The marginal propensity to consume \((M P C)\) is \(0.80,\) and the government increases spending by \(\$ 500\) billion. As a result, aggregate demand will rise by a. zero. b. \(\$ 2,500\) billion. c. more than \(\$ 2,500\) billion. d. less than \(\$ 2,500\) billion.

If the marginal propensity to consume \((M P C)\) is \(0.60,\) the value of the spending multiplier is a. 0.4 b. 0.6 c. 1.5 d. 2.5

Mathematically, the value of the tax multiplier in terms of the marginal propensity to consume \((M P C)\) is given by the formula a. \(M P C-1\) b. \((M P C-1) / M P C\) c. \(1 / M P C\) d. \(1-[1 /(1-M P C)]\)
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