HFA Test 2 UPDATED Exam Questions and
CORRECT Answers
monetary policy - CORRECT ANSWER - the setting of the money supply by
policymakers in the central bank
fiscal policy - CORRECT ANSWER - the use of government spending and revenue
collection to influence the economy
John Maynard Keynes - CORRECT ANSWER - British economist who argued that for a
nation to recovery fully from a depression, the govt had to spend money to encourage investment
and consumption
neoclassical economics - CORRECT ANSWER - economic theories and approaches that
studies how people make decisions to allocate resources like time, labor, and money in order to
maximize their personal benefit
Milton Friedman - CORRECT ANSWER - famous American economist. He strongly
promoted the idea of free trade and condemned government regulation and socialism.
monetarists - CORRECT ANSWER - those who argue that government can effectively
control the performance of an economy mainly by controlling the supply of money
gold standard - CORRECT ANSWER - backing dollars solely with gold
Bretton Woods system - CORRECT ANSWER - economic order negotiated among allied
nations at Bretton Woods, New Hampshire, in 1944, which led to a series of cooperative
arrangements involving a commitment to relatively low barriers to international trade and
investment.
fixed exchange rates - CORRECT ANSWER - a system under which the exchange rate for
converting one currency into another is fixed
CORRECT Answers
monetary policy - CORRECT ANSWER - the setting of the money supply by
policymakers in the central bank
fiscal policy - CORRECT ANSWER - the use of government spending and revenue
collection to influence the economy
John Maynard Keynes - CORRECT ANSWER - British economist who argued that for a
nation to recovery fully from a depression, the govt had to spend money to encourage investment
and consumption
neoclassical economics - CORRECT ANSWER - economic theories and approaches that
studies how people make decisions to allocate resources like time, labor, and money in order to
maximize their personal benefit
Milton Friedman - CORRECT ANSWER - famous American economist. He strongly
promoted the idea of free trade and condemned government regulation and socialism.
monetarists - CORRECT ANSWER - those who argue that government can effectively
control the performance of an economy mainly by controlling the supply of money
gold standard - CORRECT ANSWER - backing dollars solely with gold
Bretton Woods system - CORRECT ANSWER - economic order negotiated among allied
nations at Bretton Woods, New Hampshire, in 1944, which led to a series of cooperative
arrangements involving a commitment to relatively low barriers to international trade and
investment.
fixed exchange rates - CORRECT ANSWER - a system under which the exchange rate for
converting one currency into another is fixed
