Question

1- Which of the following is a characteristic of the Policy-Activism view of economic thought?

The economy is inherently stable.

All of these answers are characteristics of Laissez-Faire.

Competition is the driving force in economic progress.

Government has a responsibility to manage the economy.

2-

Use statements 1 and 2 to choose the correct answer.

1. In the short run, aggregate demand factors are more important to determining GDP than aggregate supply factors are.
2. In the long run, aggregate supply factors are more important to determining GDP than aggregate demand factors are.

1 is false and 2 is true.

Both 1 and 2 are true.

Both 1 and 2 are false.

1 is true and 2 is true.

Answer 1

1. Option 4. Government has a responsibility to manage the economy.

Explanation: In activism policies, the government takes up a very active role in implementing economic policies.

2. Both 1 and 2 are true

Explanation: In the short-run, output is mainly determined by aggregate demand and in the long-term it is determined by aggregate supply.