quiz.json

{
  "Schools of thought": {
    "Classical economics": "Leave the market to its own devices, and it will naturally find a point of equilibrium that will bring stability and prosperity.",
    "Marxism": "Inequalities brought about by capitalism will eventually lead to workers seizing control in order to establish a socialist economy.",
    "Keynesian economics (positive)": "Business cycles are driven by how much people are prepared to spend. When demand falls, recessions follow. Government intervention can help weather these.",
    "Neoclassical synthesis": "Keynes was right about the short term but the classicals were right about the long term. Government intervention should be limited to the short term.",
    "Austrian school": "Only individuals know how much they value things and only the market can coordinate efficiently everyone's preferences. No government can know better than the market."
  },
  "Economic systems": {
    "Free market capitalism": "Free markets and private ownership will result in maximum prosperity and freedom for all. Companies should be able to trade any commodity without restrictions.",
    "Market socialism": "The state owns the means of production and sets prices but firms are run by their own managers.",
    "Central planning": "The state controls all the machines and factories and makes all investment decisions. There is no role for free market forces here.",
    "Mercantilism": "Keep the foreigners out and your money in and make sure you always sell more abroad than you buy (with the help of subsidies and tariffs)-- it's nationalism for the economy.",
    "Shock therapy": "The best way to fix a broken economy is in one fell swoop, but to liberalize, a country needs a restructured economy and a framework of law and regulation.",
    "Washington consensus": "Keep your controls open and your government small and business will grow, grow, grow."
  },
  "Economic cycles": {
    "Keynesian economics (normative)": "The government should spend and cut taxes to stimulate production, and so lead to full employment, which will soften economic downturns.",
    "Monetarism": "Controlling the supply of money has a direct effect on the economy. Increase the supply to encourage growth, reduce it to control inflation.",
    "Phillips Curve": "A government has to choose -- low inflation or full employment, it can't have both.",
    "Permanent Income Hypothesis": "You spend according to what you are going to earn over your lifetime, not according to what you simply earn today.",
    "Rational Expectations": "You make decisions about the future on the basis of available information. Even if it turns out to be wrong, that was still the best decision to make.",
    "Time Consistency": "Once a government has decided on a course of action, it should maintain that course in order for goals to be achieved.",
    "Financial Accelerator": "Losses make it harder to borrow, which in turn leads to more losses; and every time the problem gets bigger. It's like a financial snowball.",
    "Financial Instability Hypothesis": "Stability makes people reckless. Borrowers borrow to excess; lenders lend to excess. The resulting defaults cause a financial crisis.",
    "Lender of Last Resort": "A safety net for financial crises ... does it encourage excessive risk taking by financial institutions and governments?"
  },
  "Growth": {
    "Neoclassical growth": "Growth depends on three things: technological change, capital accumulation, and the growth of the labor force. But its rate of growth will slow the larger it becomes.",
    "New growth theory": "Innovation is a direct result of healthy growth, but innovation doesn't happen by accident -- it needs investment.",
    "Creative destruction": "Technological advances and innovative production methods are just two forces of change that see some companies rise and others fall.",
    "Human capital": "Investing in training and education creates wealthier individuals and a wealthier economy.",
    "Rule of law": "Free markets work wonders, but for that to happen you need more than a buyer and a seller. You need arbitration between the two in case they get into a fight.",
    "Limits to Growth": "The economy can't keep growing forever, because there's not enough to go around. Eventually there will be nothing left to consume."
  },
  "Global trade": {
    "Comparative advantage": "If you produce what you're 'most best' at, and I make what I'm 'least worst' at, and we trade freely, there will be more for everyone.",
    "Heckscher-Ohlin trade model": "Producing and trading in goods that utilize the most abundant production factors will benefit free trade.",
    "New trade theory": "If bigger firms are more efficient, then maybe governments can help create competitive advantage.",
    "Optimum currency area": "If a number of regional economies don't respond in the same way to external shocks, then they should each have their own currency and adopt floating exchange rates.",
    "Impossible Trinity": "Fixed exchange rate, international capital mobility, or control of monetary policy? Pick two, because you can't have it all.",
    "Purchasing power parity": "Get rid of borders and your burger will cost the same everywhere. If it doesn't, it's because governments play games with exchange rates."
  },
  "Choice": {
    "Rational choice": "People make choices for a reason. Whether choosing a car, a university or a spouse, they look at all the facts and make a rational judgment.",
    "Game theory": "Strategic decisions should be made on the presumed actions and reactions of other players.",
    "Public choice": "Politicians and economic actors behave in a way to maximize their personal interest.",
    "Expected utility theory": "How do people make decisions in the face of uncertainty? By weighing the probabilities of possible outcomes and how happy each of those outcomes would make them.",
    "Prospect theory": "People make decisions in the face of uncertainty by comparing possible outcomes to where they stand today (or, at least, how the choices are framed)."
  },
  "Tax and spend policies": {
    "Tax incidence": "Taxes raised on a producer can result in them being passed onto the consumer.",
    "Excess burden": "Taxes cost more than just the money the government gets out of us. It's also all those things we would have consumed but don't because of the tax.",
    "Supply-side economics": "Greater growth depends on greater incentives for those who invest and for those who work. Governments should tax everyone less.",
    "Crowding out": "When people's savings are in government bonds, less wealth is available to finance private investment."
  }
}