Economist Abba Lerner Compared the Economy to a Car Needing

question 194

Multiple Choice

Economist Abba Lerner compared the economy to a car needing

• A)an efficiency wage to make the labor markets work like an efficient engine.
• B)regular price-level surprises, like oil changes, to make it run smoothly.
• C)a "steering wheel" that the government can use to guide it forward.
• D)a monetary rule to prevent a "backseat driver" from making it go off course.

---

Definitions:

Economic Instability

A condition characterized by significant fluctuations in economic activities such as employment, prices, or growth, often leading to uncertainty and adverse effects on the economy.

Monetarists

Economists who believe that the money supply is the main determinant of economic growth and control over inflation.

Quantity Theory

A theory in economics that describes the relationship between the quantity of money in an economy and the level of prices of goods and services.

Quantity Theory

The theory suggesting that the amount of money in circulation in an economy directly affects price levels and inflation.