ECONOMICS
ECONOMIC SYSTEMS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Competition is a regulatory force in the economy.
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Government intervention is necessary for stability.
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Government should not control the money supply.
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Less government intervention gives people more economic freedom.
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Detailed explanation-1: -“While Hayek did believe that government intervention in the price system could take us from free-market governance toward totalitarianism, he also endorsed an extensive system of social services, ” Angner explains. In fact, Hayek advocated a limited system of wealth redistribution.
Detailed explanation-2: -Why was Friedrich von Hayek against government intervention in an economy? A. It would reduce people’s economic freedom.
Detailed explanation-3: -Hayek’s theory posits the natural interest rate as an intertemporal price; that is, a price that coordinates the decisions of savers and investors through time. The cycle occurs when the market rate of interest (that is, the one prevailing in the market) diverges from this natural rate of interest.
Detailed explanation-4: -The major problem for any economy, he argued, is how people’s actions are coordinated. He noticed, as Adam Smith had, that the price system-free markets-did a remarkable job of coordinating people’s actions, even though that coordination was not part of anyone’s intent. The market, said Hayek, was a spontaneous order.